Perversely, recessionary fears caused yields on the 10-year Singapore Government Securities to fall. After moving to a high of 3.24% on June 15, the 10-year SGS yield ended the week of June 20-24 at 2.96%.
As a result, the Straits Times Index inched up to 3,111 as at June 24, compared to 3,098 on June 17, a week ago. The current rebound is likely to be temporary. The STI broke below support at 3,160 or thereabout, and this level is likely to provide resistance as short term RSI continues to rebound, albeit temporarily. Hence, the STI could continue to rebound till mid-week of June 27-Jul 1.
Despite this rebound, the chart pattern continues to indicate a downward bias. The break below the neckline support indicates a downside objective of below 2,900. As a result, the STI may move towards at least 3,000 as the chart pattern looks like a double top.
The 50- and 100-day moving averages had made a negative cross at around 3,297. This is likely to continue to exert downward pressure on prices. The 200-day moving average has flattened at 3,225. During the week of June 27-Jul 1, the 50-day moving average may make a negative cross with the 200-day moving average. Quarterly momentum retreated from its equilbrium line and may take some weeks to reach a low.
Short term traders should start getting cautious with the rebound while longer term investors could ready their dry powder for a market sell-off ahead of the 75 bps hike in the Fed Funds Rate by the US Federal Reserve next month.
