CFA Society Singapore
SINGAPORE (Sept 29): Here are some charts this week for our technical analysis.
Straits Times Index (daily)
The Straits Times Index (3,219) fell by a point over the past five trading sessions. However, during the week, the index rose to an intra-day high of 3,250, marginally below the 100-day moving average at 3,253. Short term indicators are still spoiling for an upturn. Short term stochastics started to rise a week ago and should continue moving up. ADX has turned down, but the DIs have just turned neutral and are likely to turn positive on Oct 2 (Monday).
Support has been established at 3,200-3,205. The trading range is likely to be narrow, with resistance appearing at 3,253.
On a negative note, the 50-day moving average touched a high of 3,274 in mid-Sept and ended the month at 3,269. In addition, quarterly momentum remains under pressure, and Volume levels remain low, and annual momentum, which had displayed negative divergences with the STI, continues to drift sideways.
Global economic recovery proxy
If the economic recovery gathers momentum, crude oil prices could firm despite the increasing use of solar, wind and lithium. The local offshore and marine sector has been battered and bruised by the fallout from falling oil prices. Technically, one of the few O&M plays still standing, Sembcorp Marine, has been experiencing a very gradual strengthening.
Sembcorp Marine ($1.745) upturn imminent
On the candlestick chart, volume has picked up somewhat on white candle days, and eased off on black candle days and dojis, suggesting that demand could be returning and buyers are nibbling at this counter.
Quarterly momentum had formed a positive divergence with prices starting as far back as June. This indicator broke above its equilibrium line only in Sept. The 50- and 100-day moving averages have converged and are poised to turn positive on Oct 2.
Short term indicators strengthen
ADX is rising, and the DIs are positively placed. The 21-day RSI is forming an uptrend. These underpinnings point to a rally.
Resistance appears at $1.80, a level that could turn out to be the neckline of a secondary base formation. Ideally, $1.66, the point at the positive cross by the moving averages takes place, should be the support level. A break above $1.80 would indicate a target of $2.10. This is realistic, given the recovery in crude oil and the synchronised global economic recovery.