SINGAPORE (May 4): The Straits Times Index (Daily, 3,545)

The Straits Times Index eased during the past five sessions, but not by much. It lost just 32 points. Volume contracted during the retreat, suggesting the move is corrective rather than the start of a new trend.

Short-term indicators continue to weaken. Short term stochastics is turning down from the top end of its range. ADX is drifting lower, and the DIs are now negatively placed. These indicators suggest the STI will continue to move within a corrective pattern. Support appears initially at the rising 50- and 100-day moving averages at 3,486.

Quarterly momentum continues to hover around its equilibrium line and could still rebound. On the other hand, annual momentum continues to form a negative divergence with the STI.  

From a chart pattern point, the STI remains below what appears to be a resistance area that has been tested twice. On Apr 19, the STI tested 3,604, just shy of the year’s high of 3,609 attained on Jan 24.  A break below 3,475 would lead to a deeper correction.