Singapore Stock Market : Balancing on tight rope

The Singapore benchmark Straits Times Index (STI) fell below the immediate support level of 2,800 points and broke below the crucial support level of 2,740 points last week, lowest since November 2006. The fall to this support level was expected.

The STI managed to open higher today at 2747.97 points from 2723.30 points on Friday. However, there was no follow through in the morning to push the index higher. The index closed at 2746.35 at 12.30 noon, getting back the STI above the crucial support level.

Can the STI hold at this level and is this level strong enough to cause the market to rebound?

Since the STI is at an oversold level again, a rebound is expected, a situation similar as mid July. Although rebound is expected, it may face resistance at 2,850 points, which is a down trend line resistance level. This is because the down trend is still strong in momentum (the ADX indicator is still rising and the RSI indicator is lower).


Daily STI chart as at 12.30 noon, 25 August 2008 using NextView Advisor

Immediate support level is now at 2,700 points while further support level is 2,540 points (A Fibonacci retracement support level).

Commentary and Analysis by Benny Lee