Although technical indicators of the Straits Times Index suggest some semblance of stability, the US markets could experience something of a roller coaster in the week of Oct 4-9. Although the Chicago Board Options Exchange Volatility Index or VIX has remained remarkably modest on Oct 2, its value could change as the week progresses. The VIX peaked at 82 on Mar 16 this year, and rebounded to 33 on Sept 3. On Oct 2, at10am it stood at 28.45.

The higher the VIX is, the greater the volatility. Hence, current levels suggest that the US markets may not decline or turn overly volatile this week. The Nasdaq Composite Index made an all time high at 12,056 on Sept 2, this tech barometer could struggle a little this week. However, there are no signs that its uptrend is in danger although its accelerated uptrend could be in jeopardy. On the other hand, volatility could increase given the current state of the US political and economic scene.

Locally, the STI looks ready to rebound. ADX is falling, and is at 20 and the DIs are neutral. Interestingly, short term stochastics has turned up from the bottom of its range. At the same time, 21-day RSI has also strengthened. In addition, quarterly momentum is attempting to strengthen. These indicators should trigger a rebound in the index.

The upmove is likely to remain modest with resistance appearing at 2,524 initially and 2,574 if the rally has legs. These are the levels of the declining 50- and 100-day moving averages. So far, the chart pattern has taken the form of a gentle downtrend, with support appearing at the Sept 22 low of 2,463.  

STI with quarterly momentum - THE EDGE SINGAPORE

STI with short term indicators - THE EDGE SINGAPORE