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STI: Indicators stay weak as volatility sets in

Goola Warden
Goola Warden9/11/2020 08:41 PM GMT+08  • 2 min read
STI: Indicators stay weak as volatility sets in
With indicators weakening, the STI will stay hostage to short term downward pressure and the volatility of global markets.
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With quarterly momentum in sharp retreat, and the Straits Times Index negatively placed vis-a-vis its 50- and 100-day moving averages, both coalescing around 2,570 and 2,587 respectively, lower levels are probably likely over the next few weeks.

Any rebound, if it materialises, is likely to be tepid. Short term stochastics is on its way down and its not yet at the low end of its range. The 21-day RSI is also trending downwards. Although it is at 39, and its lower boundary is usually at 30, in March this year 21-day RSI touched 13. ADX has turned up and the DIs are negatively placed.

The STI ended the week at 2,490, a shade above the Aug 3 low of 2,484. This could well be tested in the week of Sept 14–18, and possibly breached on the downside. If so, a downside objective is indicated with the vertical measurement. Initially, though support appears at the 2,389–2,400 range. By then short term indicators could be sufficiently oversold to trigger a significant rebound.

During the market's weaker phase, the index is likely to have difficulty moving above the confluence of its moving averages at 2,570-2,587.

SIA not ready for take off yet

Singapore Airlines’ ($3.56) chart pattern remains weak as prices remain entrenched beneath the 50-day moving average resistance line. Additionally, its medium term indicators point to continued weakness, with quarterly momentum declining, ADX rising and DIs negatively placed. In the short term, stochastsics is approaching the bottom of its range, which could set the stock up for a temporary rebound in the week of Sept 14–18. However, this is unlikely to indicate the end of the downwards drift.

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