Despite the muted US closing overnight, the STI started on a positive note and headed higher still. However, when the Hang Seng kicked off the day in the red, the mood quickly changed ? the STI too started to head lower and closed midday near to its intraday low.
Volume by midday fell some 16.2% from yesterday's morning session, with the gainers trailing the losers 148 to 308. The average value per share was at S$0.82, slightly higher than S$0.67 yesterday. Performances by the sub-indices were mixed, with the FTST Technology bearing the brunt of the correction with a 2% loss.
From a technical viewpoint, the intraday MACD has just fallen into bearish territory while the RSI looks to be turning south soon, both suggesting that the index could face more downside pressure in the afternoon. A break of the 5-day intraday uptrend line could serve as a sign to further correction.
On the longer term, as long as the index can sustain itself above 2551 (centre regression line), we believe that the next upside target of 2769 (upper regression line) could be achievable.
However, in the near-term, the STI still faces notable hurdles at 2688 (late Aug 08 low), and 2700 (psychological).
Immediate support has been shifted up to 2600, while the next stronger support is at 2337 (30- and 50-day moving averages).
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