Although the Straits Times index eased overnight to end at 3,276 on Jan 6, its indicators have strengthened. During the Christmas and New Year season, the STI’s quarterly momentum managed to rebound off its equilibrium line and this indicator continues to rise.
Directional movement indicators are neutral. ADX has flattened at 12, which is the low end of its range. The DIs are neutral.
Against this, resistance remains at the four-times tested 3,306 level. On a positive note, the 50-day moving average, currently at 3,228, is rising and should continue to provide support.
A break above 3,306 on expanding volume is required to set the STI on an upside target. At present, the consensus is somewhat negative which is good for the market because that implies investors are more likely to be out, waiting on the sidelines.
As indicared by the minutes of the December 2022 Federal Open Market Committee (FOMC) meeting, the US Federal Reserve remains hawkish, preferring to wait to see if there are more signs of inflation easling.
In the second half of December, yields on 10-year US treasuries have rebounded, from 3.4731% as at Dec 15, to 3.7653%. The 100-day moving average is currently at 3.6351%, and this is the level for the 10-year yields to break below to trend lower.
See also: STI’s upside from breakout remains valid as risk-free rates fade, but stay watchful for FOMC
