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Disclaimer:-Please note that all such analysis is provided by way of information only. All of the information was and should be taken as having been prepared for the purpose of reference only and that none were made with regard to any specific investment objective, financial situation or the needs of any particular person who may receive the analysis. Any recommendation or advice that may be expressed in or inferred from such analysis therefore does not take into account and may not be suitable for your investment objective.

Tuesday, November 25, 2008

Technical view on ST Index

by DMG AND PARTNERS SECURITIES (25 Nov)

STRAITS Times Index (STI): Edging closer to the 1,391 level.

We have previously noted that the STI is set to fall due to the Symmetrical Triangle pattern that had formed. While the STI did eventually drop 10.7 per cent to its intraday low of 1,570 during the previous week, we had underestimated the magnitude of the decline as we had expected the index to 'consolidate with a bearish tone' - the breakout move out of the Triangle had taken place slightly earlier than we have anticipated.

We had also mentioned that the break below the 1,600-1,717 region would imply that the index is set to target the 1,391 mark to complete the 161.8 per cent move of Wave A. While this view remains and with the STI still in the midst of a Wave C, we now note that this level should be attained by January.

As for our weekly short-term view for the STI, we believe that any rebounds should be shortlived. With the potential bearish moving average crossover on the MACD chart looming, the breakout move from the Triangle looks poised to continue. Additionally, the 14-day RSI is still hovering above the 30 level, suggesting that the STI is not yet oversold.

Support is set at the 1,570-1,580 area which is in line with the lower bollinger band while resistance is derived at the 1,760-1,770 range as depicted by the confluence of the 14- and 21-day moving averages.

-Research Report by DMG AND PARTNERS SECURITIES (25 Nov)

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