CFA Society Singapore
SINGAPORE (Feb 1): Although the Straits Times Index moved sideways over the past five trading sessions, the index still looks able to challenge and break out above resistance and its 200-day moving average now at 3,238.
Volume has expanded, and quarterly momentum is on an uptrend. The 50- and 100-day moving averages have made positive cross, which should confirm the ability of the index to break out.
In the short term the STI maybe constrained because of the downturn of short term stochastics and the 21-day RSI has stalled. However, when stochastics turns up, it should reinforce rising quarterly momentum to support a breakout.
The earlier break above 3,190 indicates a target for 3,420. Support and the fail safe level is at 3.190 below which the upside is no longer valid.
Resource companies continue to advance
Wilmar International ($3.34) -- which broke out of resistance $3.26 -- indicates an eventual target of $3.60. The breakout has been confirmed by the positive cross and upturn of the 50-, 100- and 200-day moving averages and rising quarterly momentum has also broken out.
Olam International ($1.84) has faltered somewhat but it should continue to advance, albeit gradually. The earlier break above $1.77 indicates a target of $2.00 and this remains valid for the time being.
Chip Eng Seng may strengthen
Chip Eng Seng has managed to move above its 50-day average and a minor resistance at 70 cents. Volume expanded and quarterly momentum has also broken out.
Prices will need to stay above 70 cents till after Chinese New Year to confirm its breakout. A successful break indicates a target of 77 cents. If prices sink back below 70 cents, the upside is no longer valid.