STI clears resistance as blue chips gain ground

Both investors and punters are focused on blue-chips. Lower liners, in particular Myanmar plays, are being given a wide berth. The three local banks continue to rise. DBS Group Holdings surged as its net asset value was revised upwards to $13.72, as at March 31. United Overseas Bank met, and has surpassed, its upside of $21.50. Oversea-Chinese Banking Corp had moved ahead earlier. It has an upside of $11.70, which is attainable. Fraser and Neave has rebounded to its 200- day moving average at $8.48. This level could provide some temporary resistance and prices could hover around it for a few sessions. If it manages to regain this level, the counter should be able to cover the gap between $8.72 and $8.88.

Elsewhere, City Developments is at the neckline of a base formation. A successful breakout would indicate a target of $12.50. CapitaLand has already broken out of its minor base formation and is heading for $4. Keppel Land broke out of a minor resistance earlier, and is challenging the several-times-tested $4.03 level currently.

Singapore Telecommunications is at a post-2008 high, and its momentum is likely to persist. The strength in index components should support the Straits Times Index’s break above the several-times-tested resistance at the 3,300 to 3,308 range. A temporary retreat is imminent, but the upside of 3,470 should be attained shortly. There is a new upside target, but that is an eventual target.

The Hang Seng Index (22,668) is likely to meet resistance near current levels, at 22,717, at the flat 100-day moving average. RSI has rebounded, but 65-day ROC is in a downtrend and broke below its equilibrium line recently. Support has been established at 21,500, and the 200-day moving average is at 21,617.

VIX STRENGTHENS, DOW GOES SIDEWAYS

The VIX (14.49) rebounded and is back at the top of a base formation. ADX has turned up and the DIs are positively placed, suggesting a firmer phase ahead. Quarterly ROC appears to have turned up as well. Resistance stays at 19 and support, at 11.

The Dow Jones Industrial Average (14,700) moved up marginally through the week. Quarterly ROC has formed a negative divergence with price and has begun to ease. Short-term support is at the 14,382 to 14,400 range and a break below this level completes the minor top. Resistance has been established at 14,880.

The Standard & Poor’s 500 (1,582) firmed marginally during the week, but the chart pattern continues to look like a minor top. Quarterly ROC is turning down after a negative divergence. An upturn by 21-day RSI has triggered a rebound, but this is likely to find resistance at 1,597. Short-term support appears at 1,540, and a breakdown completes the top.