Even then, quarterly momentum has not broken down and could find support at current levels. 21-day RSI remains fair and remains in positive territory.
Directional movement is neutral to positive, and the directional indicators (DIs) are positively placed. As such the STI should be able to labour on upwards. If the STI manages to hold above the minor breakout level of 4,440, then 5,000 is just about at hand.
The index movers on Nov 7 were Oversea-Chinese Banking Corporation (OCBC) and Singapore Telecommunications (Singtel), which were two of the 10 out of 30 constituents that had gains. They are also the second- and third-largest stocks by market capitalisation in the STI. Hence, despite declines in DBS Group Holdings and United Overseas Bank (UOB), the STI was able to register a modest gain.
See also: Trump trade triggers US market sell-off; STI escapes the worst for now
Since the range is tight, if the STI moves significantly below 4,440, then the 5,000 level could remain a pie in the sky. However, for the STI to move higher and test 5,000, all it needs is for DBS to get to a market capitalisation of $200 billion. which is not unthinkable.
UOB has been weak because of its results, but, with group CEO and major shareholder Wee Ee Cheong acquiring 150,000 shares at $33.74 apiece, prices could rebound in the week of Nov 10-14.
Clouds could emerge from the other side of the world. The S&P 500 which is on an uptrend has formed a negative divergence with both quarterly momentum and 21-day RSI. In addition, directional movement looks like it may not help the S&P500 move higher. The DIs have just turned negative.
See also: STI gains strength as S&P 500 flounders and US risk-free rates creep up
The saving grace is that the average directional index (ADX) is falling, suggesting that prices may range sideways rather than fall sharply. A minor support level appears at 6,550, a level that almost coincides with the rising 50-day moving average at 6,665. The S&P 500 last traded at 6,720.
Gold has retreated from its high at US$4,356 per oz on Oct 20, falling to US$3,999 on Nov 7. The rising 50-day moving average is at US$3,878. The 21-day RSI is fluctuating below its equilibrium line. Quarterly momentum has formed a downtrend. ADX is falling and the DIs are neutral but they could turn negative if prices fall between its 50-day moving average.
This suggests that those keen to buy some gold could do it at lower levels. Jewellery anybody?
