In the meantime, the STI is likely to remain rangebound with 2,970 as the low point, and resistance appearing at the breakdown level of 3,140 to 3,150.
Risk-free rates remain stubbornly high. The 10-year US treasury yield (UST10Y) has come off from near 5% which has turned out to be a resistance of sorts. However UST10Y continues to fluctuate in the 4.84% to 4.93% range which is at the high end of a 15 year range. Although a minor negative divergence has started to develop between quarterly momentum and UST10Y, and ADX has flattened at 48, which is an overextended range, UST10Y is unlikely to move much lower from 4.8%. On the other hand, the risk-free rate may have difficulty breaking above 5% as indicators are overstretched and peaking.
In sum, markets are likely to remain skittish, with current oversold readings for Nasdaq and S&P 500 limiting their downside, but uncertainty and poor sentiment limiting their rebounds.
See also: STI may retreat on strong overbought pressures but REIT Index may break out
