SINGAPORE (May 15): During the week, the Straits TImes Index was unable to move above its declining 50-day moving average.
This indicator is currently at 2,570, and falling at the rate of around 8-9 points a day.
On May 11, the STI was at 2,611 against the 50-day moving average at 2,609. Since then, the index has retreated to its current level of 2,523.
Meanhwile, quarterly momentum moved above its own moving average, and has managed to hold on to that particular move.
The STI’s chart mirrors that of DBS Group Holdings which is also entrenched below its 50-day moving average. DBS ended the week at $19 versus its 50-day moving average at $19.05.
Moving above the 50-day moving average isn’t the best sign of a breakout, but it gives an early warning signal of strength near market lows, and weakness near market tops.
Since the STI has retreated from a resistance area at 2,620, the ensuing move above the 50-day moving average is likely to be a weak one.
The STI’s ADX — which helps to distinguish between a trending market and a ranging market — continues to fall and is at 13.
The DIs have turned negative from neutral, suggesting that the index may ease during the coming week. This is confirmed by the 21-day RSI which is turning down near its equilibrium line.
Separately, both annual momentum and two-year momentum have stopped falling at their oversold lows.
The immediate support range is at 2,380–2,389. Resistance/ breakout is at the 50-day moving average.
The year’s closing low reached on Mar 23 was 2,231, and that is the level that needs to hold in the event of a resumption of the decline.