Although the Straits Times Index declined by 61 points week-on-week to end at 3,130, a late rebound on Sept 30 pared losses. Nonetheless, the week-on-week moves did nothing to strengthen indicators. Quarterly momentum has fallen towards its equilibrium, and equilibrium line support stopped the indicator from breaking below it. However, a break below its equilibrium line by quarterly momentum appears to be inevitable.
Directional movement indicators are pointing to further declines. ADX is rising and the DIs are now negatively placed.
Price movements during the week of Sept 26-30 caused the STI to fall below and stay below its moving averages. Immediate support is the three-times tested 3,120 level. Resistance is now at the 3,233 level. Since volume expanded on the days the STI declined, selling pressure has not completely abated.
The yield on 10-year US treasuries stood at 3.70%, down 3 bps week-on-week. During the past five trading sessions, the US 10-year yields went as high as 3.95%. It is too early to even hint that the 10-year yields have peaked. The inverted yield curve persists, a sign of recessionary winds.
Interestingly, though, WTI crude oil, at US$80 per barrel, is down from the US$93 per barrel it was trading at in the last week of August, but is higher than the US$77 of a week ago. If WTI and North Sea Brent trade at progressively lower levels for the next four weeks, that is likely to be a sign that the worse of the inflationary trend could be behind us.