STI resistance and support

The STI, already up a massive 5.9% yesterday to close at its highest level of 1803.34 since 9 Jan, should continue to enjoy the positive vibes currently seen in global equity markets; the Nikkei 225 is already up 1.9% in early trade; ASX is up 1.7%.

However, the flat US index futures in after-hours trading, suggests that sentiment is still slightly cautious ahead of the US jobs report tonight and that could induce some profit-taking in the local market; this especially if the STI fails to retake the 1827 (8 Jan close).

Nevertheless, we think that profit-taking at this stage is healthy as the index has risen by >20% from its 1455 low in early Mar; this may be a case of too fast, too furious ? daily technical indicators are showing signs of being overbought, although the tone is still pretty bullish.

We continue to see the key resistance as 1860-1880 (breakdown gap in Jan), which may prove to be a slightly tougher nut to crack, given that there is another resistance just ahead at 1883 (23.6% Fibonacci retracement of the plunge from all-time 3270 high to the recent 1455 low).

Our upside objective remains at 1960 (based on the double-bottom formation we spotted in mid March).

On the downside, our initial support is pegged at 1780, ahead of 1730 (yesterday's intraday low); a much stronger and important support can be found at 1700 (100-day moving average).

Sponsored Links