The Straits Times Index managed to end the Year of the Rat above its 50-day moving average which has flattened at 2,901. Although the STI had fallen below 2,901, it had remained above its 50-day moving average whose ascent has leveled off in the past week, from 2,892 to 2,901. The index ended the second week of Feb at 2,925, up 18 points week-on-week.

However, despite the STI hanging on to its own moving average, its quarterly momentum has fallen below its 50-day weighted moving average. This move takes the indicator below a support. If the index follows quarterly momentum lower, it too could break below a support, and move towards lower levels, to around more substantial support at 2,795. Moving averages are helpful support and resistance guides, and the 50- and 200-day moving averages often act as support lines in uptrends, and resistance lines in downtrends. 

What should prevent a sharper decline are stochastics and directional movement. Stochastics has turned up from the bottom of its range. ADX continues to fall and the DIs remain neutral, preventing a strong decline.

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