The Straits Times Index did indeed start a rebound during the week of June 12-16 which gathered steam mid-week, gaining 74 points week-on-week to end at 3,260 on June 16. Since May 31, the STI has gained some 102 points.

The move that took the STI from 3,158 to 3,260 may well have legs. ADX is at 17 after turning up, and this level is relatively modest. Short term RSI is rising following its positive divergence, but has not reached its overbought line yet. Hence the STI may attempt to move towards the 3,319 to 3,320 level before a correction sets in.

Yields on the 10-year US treasuries remains resilient, and the yield, at 3.7284% as at June 15, remains above its moving averages, with its 200-day moving average at 3.6549%. The 10-year yield needs to fall below 3.65% for any sustained equity rally.

Currently, a few large caps in the US are holding up the indices. This strength needs to broaden out during the summer for the US market to regain its up-momentum. Failing this, markets - led by the US - are likely to remain somewhat moribund.

<span class='see_also_inread'><b>See also: <a class='gtm_see_also_1_inread' style='text-decoration: underline;' href='/capital/right-timing/equity-markets-dictated-rising-risk-free-rates?utm_source=website&utm_medium=article&utm_campaign=ONPAGESEO'>Equity markets dictated by rising risk-free rates</a></b></span>

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