SINGAPORE (Oct 25): Quarterly momentum continues to rise, and this trend is set to persist till momentum approaches its equilibrium line.

Chart 1: STI with moving averages and momentum

At the same time, the 50-day moving average has flattened and is beginning to turn up at 3,130, up 2 points since a week ago. The Straits Times Index is likely to rise further from current levels, with resistance appearance at the 3,208 and 3,224 range, which represents the 100- and 200-day moving averages.

The only cautionary indicator is volume which remains low and has not been able to expand as it should have done if the market had greater strength. Support, in the event of a pull back appears at the 50-day moving average at 3,130.

Chart 2: Short term indicators

Short term stochastics is rising and is has room to rise further from current levels. The 21- day RSI is likely to move higher. The DIs have turned positive. ADX has flattened at 15, which is low, suggesting that it too has room to rise. If ADX turns up with DIs positively placed, the rally could turn out to be stronger than anticipated.