SINGAPORE (June 19): Near term moves for the Straits Times Index may continue to be sideways as it was during the week of June 15-19. The STI started the week at 2,649, and ended it at 2,634. In particular on Friday, June 19, the index closed below its open although the range remained narrow. However volume surged, and this could indicate a supply/ selling.  

Technically, the STI continues to hold above a support area at 2,620 which was an earlier breakout level. At the same time, the 50-day moving average is at 2,601, and it could also provide additional support during the week of June 22-26.

Short term indicators have weakened. Stochastics has turned down from the top of its range. The 21-day RSI which had retreated from a high of 72 is at 49, and could continue lower. ADX retreated and is at 16 just as the DIs have turned negative. These suggest some uncertainty and that the STI is likely to stay within a narrow range.

On the other hand, quarterly momentum continued to rise and has broken above the confluence of resistances at its equilibrium line. But this has not been accompanied by confirmation in the chart pattern, or other indicators.

With a slightly weaker chart pattern, the index may be buffeted by global markets. For instance the S&P 500 (SPX) - which closed at 3,115 on Jun 18 - is approaching 3,230-3,250. The rally that started in April has taken place on much lower volume than when prices started falling in March. That may suggest that resistance could start to appear soon.

For the STI, so long as the breakout level holds, the upside of 2,889 still stands.