Straits Times Index=2,576 (High Index, High Prices, High Volume.....)

By half day Singapore market volume has crossed 2bln shares. Becareful......increase your cash holding just in case....

From a technical viewpoint, the intraday MACD indicator has initiated a bearish crossover in the positive territory in the morning and the intraday RSI is now hovering near to the midway level; these suggesting that the index could likely see more downside pressure in the afternoon.

The STI gapped up at the opening and continued on higher throughout last Friday to close at its intra-week highs of 2,533.43. Week-on-week, the index rallied another 102pts or 4.2%. The index is likely to continue on its climb to new highs this week, likely to test the 2,575 and 2,634-2,643 resistance. As its RSI is now in an overbought situation, we think that this rally might be broken up by minor pullbacks along the way. The gap of 2,484-2,503 would likely be the first support for the benchmark index. The other supports are at 2,389, 2,312 and 2,288. Both its indicators remained supportivefor the bulls.

The 38.2% retracement level of 2,363 has been hit and past marginally. The index has just breached its long term resistance trend line at 2,300 (and still staying above it), which suggests that the baton is slowly changing hands from the bears to the bulls. The base building phase appears to be finished and index is likely on its way higher to retest the 50% FR levels at 2,643 in the coming months. A break back below the trend line support currently at 2,200 would suggest that the longer term downtrend has resumed.

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