Straits Times Index (Week of 7 June 2021)

The Straits Times Index (STI) opened this Monday morning at 3,169.69 points, how will it fare in the near future?

After reopening most of Singapore's economy over three phases, the STI made a bullish streak towards its psychological 3,000 level, pierced through and went on to even hit the 3,200 level. 

The 3,200 level was in fact, the level prior to the lockdown in April 2020 and therefore we can say that the index did make a full recovery. 

Uncertainty returned in Singapore 

As soon as STI reached the 3,200 level, consolidation started to happen with the high of 3,237.23 points made on 30 April. The distribution phase ended with a breakdown of its 1st support region just as Singapore announced the tightening of its Covid-19 rules (Heightened Alert) amidst infection in the community. 

Overreaction to the Heightened Alert

Despite the breakdown, price flirted around the 2nd support (a breach down towards the psychological 3,000 level) and rebounded strongly back its 1st support.

This rebound did not touch 3,200 points at this point in time and is currently hovering around its 1st support. 

What can happen to the STI?

The taskforce will be providing updates on the Heightened Alert at the end of this week and the movement of the STI would depend largely on whether some rules will be relaxed.

As long as the number of cases do not rise over the next few days, all could be well and we can expect a return and even a rise beyond the 3,200 level. 

Straits Times Index (Week of 25 January 2021)

As mentioned by my previous Straits Times Index (STI) article for the week of 7 November 2020, I predicted that STI would start to experience a correction by breaching below the 3rd resistance. 

Picture: Daily chart of STI, via TradingView.

Formidable bullish movement still

However, it was wrong on my part. The STI, after consolidating, continued its way upward with a strong breakout towards the psychological 3,000 level.

The prediction of a breach below the 3rd resistance did not happen, and now became the 2nd support in the chart above. 

Bulls are weakening - for now

However, based on the chart, the STI starts to decelerate on its bullish strength after a breakout. This is to show that buyers have been taking off their purchases at the psychological level. 

What can happen as we move forward?

With that, I would expect STI to have a correction temporarily over the next few days, in an attempt to retest the 2,920 region first. 

If you notice, this is also the high of the consolidated triangle between 2,800 to 2,900 region.

Straits Times Index (Week of 7 November 2020)

The Straits Times Index (STI) ended at 2,839.89 points on last Friday - 160 points more to the psychological 3,000 level which was last seen during pre-coronavirus pandemic. 

Picture: STI daily chart, via TradingView

Correction back to 3rd resistance 

As mentioned last week, the STI had indeed underwent a correction back to the 3rd resistance after a long, sharp rally. Another extremely tall red candlestick was seen on 30 Nov, last Monday. 

Since STI took a turn back from the 2,900 level, this shows that a temporary resistance was formed.

Support was intact at 3rd resistance 

Over the next four days after a sharp decline on last Monday, buyers began starting to pick back up on the STI. 

Tuesday, Wednesday and Thursday were accumulation days where "green candlesticks without a noticeable rise" was seen.

On Friday, STI opened above the resistance level and ended higher. The bulls were back in action again.

What can happen to STI next week?  

The STI will be looking to return towards the previous high (resistance) prior to the fall - which is the 2,900 level as mentioned earlier just now. 

Do beware! I personally do not think this correction is over. A correction should bring STI back much more instead of very little. This is more likely when the STI had already flew 500 points.

This 2nd bullish attempt may be a failure when approaching towards its previous high. Stay cautious.