SINGAPORE (Dec 8): The US markets’ volatility had a limited impact on the Straits Times Index which ended the week at 3,111. However, it prevented a clear move above the 100-day moving average at 3,162. But the index remains above its 50-day moving average which has flattened at 3,093.

At end Nov, the STI moved above the Nov 2 high of 3,116 and the area around this level may yet provide support. If so, the index should rebound during the week of Dec 10-14. On Dec 3, the STI closed at 3,190 before retreating. Quarterly momentum remains resilient. Meanwhile, directional movement indicators are neutral. ADX is flat, and DIs are positively placed. A break above 3,100 indicated an upside of 3,240, but this indicates potential and is not an absolute target.  

The main negatives for the STI are the 21-day RSI and annual momentum. The 21-day RSI turned down. It could still be supported at the 50 level, and it is not a meaningful indicator. Annual momentum however, is unlikely to reverse its downtrend, limiting the rally. This is an important indicator. While strength could return in the near term, the STI is likely to remain below its declining 200-day moving average at 3,304.