Technical Outlook for STI

The significant rebound by US stocks overnight and the strong Nikkei start inspired the local bourse to a very optimistic start this morning.

Following a 0.5% jump at opening, the STI climbed steadily through the first half of the morning. However, we observed that the market was hit by a wave of heavy buying pressure in the late morning. This helped propelled the index for as much as 1.5% before closing midday just a tad lower (still 1.2% in the black) this reaction is likely caused by a sudden flow of funds back into the local market.

Meanwhile, overall volume traded jumped 55% to 875m vs. 563m seen yesterday morning, while the average value per share also climbed to S$1.20 versus S$0.95 seen during yesterday’s AM session winners overwhelmed losers 343 to 83.

Technically, the index has clearly initiated a bullish break from the upper boundary of its 3-day intraday downtrend channel. But with the intraday MACD already initiated a bearish crossover just before lunch break, this suggests that the further upside in the afternoon is likely to be limited.

For now, we have shifted the immediate resistance to 3120 key level (key support-turned-resistance), followed by 3180 (support-turned-resistance). On the downside, we now see the immediate support at 3080 (200-DMA), followed by 2965 (resistance-turned-support).