The rally by the Straits Times Index should continue, since the index has risen above its key moving averages. During the week of Nov 9-11, the STI rose a further 133 points, taking the total the index has gained in the past 10 sessions to 288 points, ending at 2,711. The rally, underpinned by rising volume initially, has managed to take the STI above its 200-day moving average, currently at 2,640, a level that should now provide support. Resistance appears at the bottom of the breakaway gap formed on Mar 9, at 2891.
In the immediate term, short term stochastics is approaching the top end of its range and is starting to peak. This, coupled with a minor downturn by ADX, could cause the rally to pause. Since quarterly momentum has broken above a resistance at its equilibrium line and continues to build on an uptrend, any retreat in the week of Nov 16–20 is likely to be shallow and temporary.
For more stories about where the money flows, click here for our Capital section
