The Straits Times Index ended the week (Mar 8-12) at 3,095, up 82 points week-on-week, but below its intra-week high. In the short term, the index may move sideways as short term stochastics eases from the top end of its range.
SEE:Momentum suggests STI should gain strength against the Dow
More broadly, the STI is likely to move progressively higher, given that quarterly momentum has rebounded off its equilibrium line and remains in positive territory.
See also: Why has SATS underperformed the STI and the market? Elsewhere, REIT Index is set for higher levels
A year ago, the STI broke down from 3,018 as Covid-19 turned into a pandemic and spread through the US in February and March 2020. The STI is likely to continue to benefit from these declines a year ago, as annual momentum rises into positive territory. Two-year momentum has also turned up.
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For the STI, the next resistance is at 3,368 to 3,377, an area that was tested twice in 2019, but which the STI was not able to successfully challenge. It could well challenge this resistance zone this month, given that its two year momentum is rising in tandem with its annual momentum.
The cycle for the US market is different. The Dow Jones Industrial Average started to recover in April 2020, suggesting that the US market could head into some turbulence next month. The local market struggled last year and languished from July to Nov. That bodes well for local blue chips this year.
