SINGAPORE (June 26): The Straits Times Index appears poised to move below the confluence of a support and its 50-day moving average at 2,605. On June 19, there were hints of supply/selling when the index closed below its open on a surge in volume. During the week of June 22–26, the STI managed to hold at or around its support area. In the week of June 29–July 3, the index may drift below its support area.

This is because the downturn and decline by short term stochastics, coupled with the downturn of 21-day RSI, and other short-term indicators, may drive the index lower. In addition, the DIs are negatively placed, although ADX is at 15 and falling. ADX and directional movement indicators may limit any decline to a gentle downwards drift.

Quarterly momentum continues to rise, but annual momentum and and two year momentum tested their declining moving averages and retreated.

If the STI falls below its current level of 2,605, support appears next at the 2,500 area. Still, the current easier phase is taking place on very low volume, and that is a saving grace.

Global markets are volatile. The S&P 500 (SPX) appears to have encountered resistance at the 3,230 to 3,250 range. The index made a high of 3,387 on Feb 19 before starting a plunge, bottoming on March 23. 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 stall the rally.