The Straits Times Index (3,314) broke above a three times tested resistance at 3,265 to 3,270 on July 17, indicating a near term target of 3,400. This underscores an earlier break above a reverse head-and-shoulders formation in January which took place at 3,184 indicating a target of 3,500. This target remains valid but could take some time to attain.
Quarterly ROC rebounded off its equilibrium line which has been established as a support. ADX has turned up from a low level of 9, and DIs have turned positive. The 21-day RSI is having some issues rallying strongly suggesting that the index may flatten in the short term. Any retreat meets with support at the most recent breakout level at 3,265.
There is no change in the trend of long-term indicators. Both annual and two year momentum remain in rising trends and the main uptrend has yet to run its course.
CapitaLand ($3.74) gunning for $4
This counter has cleared a strong resistance area around $3.64 to $3.65, supported by volume expansion. This may suggest institutional buying. The 50- and 100-day moving averages have converged and are poised to diverge in a positive move.
Quarterly ROC has turned up from its equilibrium line; ADX has risen from a low level of 13 as DIs turned positive. These are indications that prices should be able to move progressively higher. A first test materialises when prices retreat. They should remain above $3.65. The upside on breakout is at $4.00.
Singapore Press Holdings (2.98) when will the downtrend end?
At present there are no clear signs that the downtrend is about to abate. ADX is at 34, its highest level in a year. The +DI is at its lowest level in a year, and –DI which monitors selling pressure is at its highest level in a year. Volume is still heavy.
This counter will only be ready to bottom once volume contracts and prices drift sideways to lower. That has still not materialised despite the positive divergences that have appeared between price and 21-day RSI. Quarterly ROC has yet to bottom. The low last week of $2.93 could still be breached in which event a new downside is indicated.
