Traders like to use technical analysis to identify short-term overbought and oversold levels, short-term breakouts and targets, and short-term trends. Technical analysis can also be used to identify long term, secular trends, and this can be done with momentum.

Momentum measures the rate of change of prices between two time periods. Hence, the annual momentum indicators of several blue chips, which are index components, rose sharply this week (March 5–11). This is because the markets were falling a year ago.

As a result, the annual momentum indicators of DBS Group Holdings, Oversea-Chinese Banking Corp, United Overseas Bank, and the Jardine group of Jardine Matheson Holdings (JMH) and Jardine Strategic Holdings (JSH) all rose. These are the heavyweights of the Straits Times Index (STI). No surprise then that the annual momentum of the STI also rose this past week partly because the market was falling a year ago, and also because its components are rising.

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