The Straits Times Index closed up 16 points week-on-week at 2,545 on Aug 7, but not before touching a low of 2,484 on Aug 3. Since then the STI has rebounded, but remaining under the still declining 100-day moving average at 2,574 and the 50-day moving average at 2,625. These are likely to act as resistance levels for any further attempt at a rebound.

The rebound during Aug 4-6 was probably underpinned by the upturn of short term stochastics from the low end of its range.

More medium term indicators are less spritely. Quarterly momentum continues to hover around its equilibrium line, but its own moving average has turned down, and pressures could continue be in the downward direction given the lacklustre volume when the index moved up from 2,484 to 2,545. Elsewhere, ADX is rising, and the DIs remain negatively placed, suggesting some downward pressure.

Hence the weight of the evidence points to weakness rather than strength in the week ahead.

Hints of a depletion of selling will materialise when volume shrinks as prices fall which could occur within the next two weeks. Support has been established at 2,484; and immediate resistance is at the 100-day moving average, at 2,574. If a breakout of this level materialises, accompanied by volume expansion, that would change the stance of the medium term indicators.