Although the Straits Times Index started the week on a firm note, it lost most of its gains, and ended 53 points lower week-on-week. Much of the decline occurred on Aug 20, when the STI fell to 2,527, before stabilising to end on at 2,528.
Unfortunately, the move on Aug 20 which caused a black candle, was also accompanied by an expansion in volume, an indication of supply/ selling.
Short-term stochastics continues to rise, and this could stabilise prices initially. On the other hand, 21-day RSI is on the retreat. ADX has turned up, and the DIs are negatively placed, suggesting that the probability of weakness in the market is higher than the likelihood of a rally.
Quarterly momentum continued to hover around its equilibrium line. Because the market had strengthened in June, and this is a three-month indicator, quarterly momentum could break down, below its equilibrium line in Sept if the STI is unable to regain the 2,602 to 2,627 range.
The 50-day moving average has turned down, falling to 2,607 as at Aug 21, from 2,627 a week ago. It was moving sideways early in Aug, and it could start to act as a resistance line.
In the meantime, the index was unable to hold above its 100-day moving average, currently at 2,577 and despite temporary bounces, the index may have a downward bias.
In the coming week, the index may attempt to stabilise but could ease as the week of (Aug 24–28) wears on. Support is at the Aug 3 low of 2,484, which could also be a breakdown level. Resistance is at the 2,602–2,627 area.