Technical View
STI, AusGroup, SingTel

Straits Times Index: Pivot line at 3,180

Our bullish forecast for the Straits Times Index (FSSTI Index) as written in our previous report has been proven right although we have underestimated the magnitude of the move. Currently, the various technical indicators are contradicting each other which makes it difficult to correctly predict the next trend for the STI. While the MACD is screaming for a continued bullish trend after its recent centreline crossover, the bollinger bands are depicting an overbought bias and the RSI has almost reached the 70 mark. Nevertheless, we have identified the pivot line at the 3,180 mark as represented by the double daily highs, 100-day moving average and the upper bollinger band. We also note that the STI has not traded above this level in almost 3 months. Should the index fail to break above this first resistance barrier, it is highly possible that price action would turn bearish and plunge all the way to fill up the technical gap at the 3,050 area. However, if this pivot line were to be broken above, the ensuing momentum that occurs could push the STI all the way up to 3,300.

AusGroup: Not overbought despite significant advances

Our target price for AusGroup (AUSG SP) written in our previous report has once again been attained. As the current Wave A has already fulfilled the benchmark 61.8% retracement of Wave 5 at $1.02, Elliot Wave theory advocates that the next Wave B may thereby commence which indicates that share price could take a hit. The technical indicators, however, suggest otherwise. The MACD is looking to produce a centreline crossover while the 14-day RSI is still below overbought territory. Furthermore, full retracements of Wave 5s are also not unheard of.

While the outlook for the price action of AusGroup may not be as clear as a fortnight ago, we are maintaining our stance for further upside in this counter. The break above its initial resistance at the $1.13 mark should translate into a full retracement of Wave 5 at the $1.29 level which serves as the second resistance point, corresponding with the 100-day moving average. Initial support would be found at the $0.95 barrier, courtesy of the technical gap which highly resembles a runaway gap. Further support would be available at the $0.78 level.


SingTel: Awaiting breakout from Ascending Triangle

Share price of SingTel (ST SP) has been relatively stable despite the volatility within the broader market. Price action in the past few weeks have carved out an ascending triangle formation (further evidenced by the decline in trading volume) which implies a potential breakout move above. Also substantiated by the fact that the MACD remains above the zero mark which signals bullishness, we therefore believe that additional upside should be in store for SingTel.

A break out of the top of the ascending triangle pattern at the $4.02 level should provide a push to the $4.14 mark which serves as resistance. Interestingly, the 50, 100 and 150-day moving averages have converged at the $3.83 - 3.85 area, signaling strong support which should keep any bearish price action in check.


DMG & Partners Research Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months
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Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
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Neutral: Share price may fall within the range of +/- 10% over the next 12 months
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Take Profit: Target price has been attained. Look to accumulate at lower levels
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Sell: Share price may fall by more than 10% over the next 12 months
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Not Rated: Stock is not within regular research coverage



This research is for general distribution. It does not have any regard to the specific investment objectives, financial situation and particular needs of any specific recipient of this research report. You should independently evaluate particular investments and consult an independent financial adviser before making any investments or entering into any transaction in relation to any securities or investment instruments mentioned in this report.

The information contained herein has been obtained from sources we believed to be reliable but we do not make any representation or warranty nor accept any responsibility or liability as to its accuracy, completeness or correctness. Opinions and views expressed in this report are subject to change without notice.

This report does not constitute or form part of any offer or solicitation of any offer to buy or sell any securities, DMGAPS and its affiliates, their directors, connected person and employees may from time to time have interest and/or underwriting commitment in the securities mentioned in this report.

DMG & Partners Securities Pte Ltd is a participant in the SGX-MAS Research Incentive Scheme and receives a compensation of S$5,000 per stock per annum covered under the Scheme.

DMG & Partners Securities Pte Ltd is a joint venture between OSK Securities Berhad (a subsidiary of OSK Investment Bank Berhad) and Deutsche Asia Pacific Holdings Pte Ltd (a subsidiary of Deutsche Bank Group). DMG & Partners Securities Pte Ltd is a Member of the Singapore Exchange Securities Trading Limited.

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