In the short term, indicators are significantly overstretched. ADX is at an all time high, an indication that the uptrend needs to consolidate. Short term stochastics and 21-day RSI have turned down from the top end of their range.
However, quarterly momentum and annual and 24-month momentum retmain intact. The index is also above its moving averages. The 50- and 100-day moving averages are at 3,303 and 3,289 respectively and they have acted as support and resistance lines since the start of this year. A breach of these levels would be negative.
Correction sets in for banks
The banks are experiencing a correction. This is largely in reaction to the rise of DBS Group Holdings following a set of results that underwhelmed. The upmove caused DBS’s indicators to become extremely overstretched.
During its corrective phase, this counter is set to lose relative strength against Oversea-Chinese Banking Corp (OCBC) and United Overseas Bank (UOB) which have displayed greater strength than DBS for the past three months.
DBS Group Holdings ($23.34): support at $22.60
Prices are undergoing a correction in reaction to extreme overstretched technical indicators.
ADX is at an all-time high, and is set to turn down. Short term stochastics which was stuck at the top end of its range has just turned down.
In addition, 21-day RSI has turned down from a one year high. These indicators point to a retreat for which initial support appears at the $22.60 to $22.80 range. Quarterly momentum and the moving averages remain intact.
