The Straits Times fell by 14 points week-on-week to 3,360. This still leaves the index comfortably above its five-times tested breakout level at 3,306.
Quarterly momentum which had been retreating, may have found some support mid-range and may attempt to form an uptrend. This indicator remains in positive territory.
The moving averages remain positively placed with the 50-day moving average 3,294. In the meantime, the 100- and 200-day moving averages made a positive cross five sessions ago. Directional movement indicators are supportive of an uptrending phase. These indicators continue to suggest that the breakout remains valid.
As a result, the STI should be able to hold above breakout-turned-support level, and eventually head towards a target of 3,600.
Yields on the 10-year US treasuries have been volatile. They have rallied from as low as 3.49% to 3.68%. The yield remains above the 200-day moving average — which has been acting as support — and is currently at 3.35%. Only a break below this level would lead to further weakness (a positive for equities and bonds). Resistance appears at 3.72%, suggesting that the upside is limited.
