Although the STI’s quarterly momentum remains above its equilibrium line, short-term indicators appear to be turning down from the high end of their range. For a breakout to be successful, various different periods of short, medium and long term indicators need to be in sync.
The Straits Times Index is likely to struggle to break above the 3,250 area as this would require volume to expand and this is absent currently. In the week of Mar 25-28, the STI moved higher to a closing high of 3,251 on Mar 27 before retreating to end the week at 3,224 on Mar 28. This is the third time that the index has tested the 3,250 area and retreated.
In the absence of an expansion of volume, the index is likely to remain rangebound. The STI could ease from the 3,250 level. Support has been established at 3,100.
