Bouts of profit-taking may affect STI's uptrend

Published February 8, 2006
BT
Chart Point

THE pre-Chinese New Year rally continued after the holiday as rotational interest spilled into second and third liner stocks.

The Straits Times Index rose to 2,450 while the UOB Sesdaq small-caps proxy touched 98.5 in the previous session.

Singapore's Budget Day will fall on Feb 17 and hopes for the current momentum to extend into an election-led rally should continue to keep markets busy in the weeks ahead.

Rotational interest remains very much alive at present.

STI's rising trend remains intact with support levels identified at 2,435, 2,416 and 2,395. Technical projection shows upside bias to 2,457 followed by 2,480.

Notwithstanding, the charts appear rather overbought if we look at daily stochastics and the 14-day RSI, which are hovering around their respective levels of 80 and 68.

The market breath McClellan Oscillator also reads above 25, which we consider as toppish.

Hence in the near term, STI's uptrend could be interrupted by small bouts of profit-taking.
By YEO KEE YAN, chartist at Kelive Research