Commentary

CIMB - STI

Immediate outlook: The Straits Times Index’s (STI) saw a wild week as the index
rebounded strongly to midweek before more profit taking activities set in. The STI ended
marginally higher week-on-week at 2,839.01. On Friday there is a possible reversal signal,
a hammer pattern on its daily chart. However, it requires confirmation before we can be
sure of a reversal. The MACD and RSI could also form a bullish divergence. Since most of
the indicators have yet to confirm the turnaround, we expect just as much volatility this
week. A retest of its Jan 22’s low of 2,746 cannot be discounted. Upside resistance is at
2,920-2,950. Trade with caution.

Medium-term outlook (2-6 months): The breakdown from its middle band support of
3,220-3,350 in January is bearish for the medium term. The index fell and tested its major
trend line support at 2,746-2,890 before rebounding sharply. It is not out of the woods yet
as its weekly indicators have remained negative. STI is now holding just above its long
term uptrend channel support. The support needs to hold steady for its long term uptrend
depends on it. It needs to build a base around these levels before it could rally again. It
has to overcome the support turned resistance of 3,220-3,350 now before the long term
rally can continue. The next main support is around the 2,500 level.

Heiwa