SINGAPORE (May 1): The US market had one of its best months in the past 30 years in April. However, May could turn out to be more volatile. The S&P 500 Index (SPX) remains in its rally pattern, but as it approaches its upside target of 3,023 following a break above resistance at 2,620 in early April, the SPX could encounter resistance.

The local market has underperformed the SPX, with the Straits Times Index rising 17.5% compared to the SPX’s 30% since their lows on Mar 23. However, going forward, the SPX may begin to consolidate.

S&P500

The STI, on the other hand, could experience some strength. An earlier break above 2,561 indicated an upside of 2,890, and the index is likely to move towards that target. This would take the STI above its 50-day moving average, currently at 2,666.

Indicators should be supportive. Quarterly momentum has strengthened a trifle, and moved above its own moving average. Volume expanded notably on April 30.

The short term indicators are a bit ambiguous. Short term stochastics is falling; ADX is at neutral levels, and the DIs cannot seem to make up their mind.

On the whole, the chart pattern suggests that the STI should make further headway.

Long term indicators have stopped declining at their oversold lows. Even though they may not fall furter, it is still too early to tell if they can stabilise.  

Hence, as it stands, the STI appears to be still in a bear market rally. 

Straits TImes Index