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Short-term moves for the STI are likely sideways as the market gathers strength

Goola Warden
Goola Warden • 2 min read
Short-term moves for the STI are likely sideways as the market gathers strength
Short term moves for the STI are likely to be sideways as the market gathers strength to break out
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Although price movements for the Straits Times Index were almost non-existent with the three point week-on-week gain to 3,316 during May 20-24, indicators continued to strengthen, and the chart pattern remained resilient.

The moving averages remain intact, and are in good order. Quarterly momentum looks a trifle off-colour, but short-term RSI and directional movement indicators are in the neutral to positive range.

In the near term, the STI may continue to move within a narrow range with support remaining at the breakout level of 3,250 a level that almost coincides with the rising 50-day moving average, currently at 3,245. Resistance remains at 3,350. Eventually, the index should be able to clear this resistance area and when it does, a new upside at significantly higher levels are likely.

The chart pattern of the yield on the 10-year US treasuries looks somewhat weak, which should be positive for equities. A major support area lies between the 50-, 100- and 200-day moving averages at 4.45%, 4.29% and 4.33% respectively. The 10-year US treasury yield is at 4.47% as at May 24. The moving averages coincide with a support area at 4.2% to 4.22%. Quarterly momentum of the 10-year yield has fallen and is at its equilibrium line. Neither indicator nor 10-year yield have broken down yet, but these levels bear watching. 

 

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