SINGAPORE (Feb 7): The confluence of the 50-and 200-day moving averages at 3,220 is providing resistance for any rebound. On Feb 6, the Straits Times Index rebounded to 3,231 before falling below 3,220.

Chart 1: STI with moving averages and momentum

The price rebound coincided with a rebound by quarterly momentum which found resistance at its equilibrium line. Since quarterly momentum is in a downtrend, the index is likely to ease from current levels, and retreat towards the Jan 31 low of 3,153.

Chart 2: Short term indicators

Short term indicators is falling after a minor double top. The 21-day RSI has formed a downtrend. ADX turned up from a low of 10 and the DIs turned negative. Now, ADX is rising, suggesting that further declines for the index should be expected. If 3,153 is broken, the next support appears at 3,087.

Ascendas REIT’s uptrend intact; experiences temporary retreat

In contrast to the STI, this counter is on an uptrend. The retreat on Feb 7 is likely to be temporary despite the very high level of quarterly momentum as the indicator remains in an uptrend. As prices rose, they were accompanied by volume expansion, which is a positive sign.

The moving averages have also made a positive sign. The 50- and 100-day moving averages drew together and now are drawing apart as they rise. The current retreat should find support at $3.10. If the high of $3.30 is challenged successfully, prices would have formed a bull flag which would lead to another price surge.