Technical View
STI, China Milk, StarHub

Straits Times Index: Consolidation expected

A clear break of the former support level at 3,095 did not occur in the Straits Times Index (FSSTI Index) as it only managed to reach a low of 3,085 in the previous week. Price action then rebounded around 100 points to hit current levels, presently standing at 3,192. While the current technical outlook seems to be slated towards a positive stance as depicted by the 4 consecutive higher highs and higher lows on the candlesticks, we caution that the various technical indicators have yet to confirm that the trend has indeed turned bullish, although they are neither inclined towards a bearish bias as well. We expect the STI to consolidate for the week before a more decipherable trend presents itself.

Immediate support is seen at the 3,140 mark as derived from the recent technical gap. The 2nd layer of support meanwhile is available at the 3,075 – 3,085 area as identified by the 100-day moving average and the low on 26-May. On the other hand, resistance at the 3,270 level should serve as a barrier to any further upside in the STI.


China Milk: Bottoming out

We had previously mentioned that the breakout move in the share price of China Milk (CMILK SP) from its Double Top pattern would break below the former support mark at $0.685. Now that this support level has been taken out and with price action having produced a bullish candlestick reversal after hitting a low at $0.65, the trend is currently turning positive as it generates a strong bounce off the lower bollinger band which it had repeatedly violated previously. Furthermore, the 14-day RSI is still way below the overbought territory, indicating that there is ample room for more upside.

Initial resistance is identified at the $0.765 – 0.770 range by virtue of a series of daily highs while stronger resistance is seen at the $0.800 – 0.805 area as depicted by the 100-day moving average and the high on 12-May. Meanwhile, support should be robust at the $0.650 – 0.655 range, courtesy of a series of daily lows.


StarHub: Looking for a trend reversal

Share price of StarHub (STH SP) has dropped some 7.7% from a high of $3.10 in Apr-08 and has repeatedly breached its lower bollinger band for the past month or so although the 14-day RSI has yet to hit oversold levels. Price action in the previous 8 trading sessions, however, do suggest that the downtrend may be coming to an end as it consolidates while a moving average crossover looks to be forming within the MACD chart.

Any potential upside, however, would be limited to the strong resistance point at the $3.00 mark due to the convergence of the 50, 100, 150 and 200-day moving averages. Nevertheless, should share price were to extend its fall, support at the $2.78 – 2.79 area would be available to cap the bearish momentum, courtesy of the lower bollinger band and a series of daily lows.




DMG & Partners Research Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months
-----------------------------------------------------------------------------------------------------------------------------------------------
Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain
-----------------------------------------------------------------------------------------------------------------------------------------------
Neutral: Share price may fall within the range of +/- 10% over the next 12 months
-----------------------------------------------------------------------------------------------------------------------------------------------
Take Profit: Target price has been attained. Look to accumulate at lower levels
-----------------------------------------------------------------------------------------------------------------------------------------------
Sell: Share price may fall by more than 10% over the next 12 months
-----------------------------------------------------------------------------------------------------------------------------------------------
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.

More

Towards a brighter tomorrow
At a time when a lot of companies are expected to weigh in with weaker sales and profit numbers amid the current global financial turmoil and downturn, JK Yaming expects to chalk up record figures for the full financial year.

Insulated US tech companies hit by slump
The US technology industry, which resisted the economy's growing weakness over the last year as customers kept buying laptops and iPhones, has finally succumbed to the slowdown.

BlackRock Global Views: 4th Quarter
Amid all of the current turmoil, our best advice is for investors to focus on broad diversification among asset classes. In these circumstances, we recommend that investors remain cautious...

Commodities to outperform stocks, says Superfund
Most commodities are likely to rebound and outperform stocks both in the short-term and over the next 3-5 years, according to managed futures fund provider, Superfund.

Deflation Fears Lurks as Global Demand Drops
As dozens of countries slip deeper into financial distress, a new threat may be gathering force within the American economy – the prospect that goods will pile up waiting for buyers and prices...

Global investors see equities as undervalued
Investors are waiting for the right conditions to return to equity markets amid the most pessimistic outlook yet recorded, according to Merrill Lynch's latest survey of fund managers.

Buy American. I Am by Warren Buffett
I've been buying American stocks. This is my personal account I'm talking about, in which I previously owned nothing but United States government bonds.

Sarasin finds silver lining in financial storm
Investors are advised to take a fresh look at global markets and seek opportunities despite the financial crisis over the past four weeks...

Threadneedle offers funds with short-sell capabilities
The UK-based Threadneedle group will soon be offering investors in Singapore mutual funds with short-sell capabilities known as 130/30 funds.

Investors eye the Fear Index
Fear is running high on Wall Street. Just look at the Fear Index. With all those stomach-churning free falls and sharp reversals in the stock market recently...

Q&A with Lead fund manager at Midas Capital International
Given the bearish market conditions, what would be your advice for investors in their approach towards their asset allocation strategies?

Q&A with Saxo Capital Markets, Asia Pacific Strategist
Given the bearish market conditions, what would be your advice for investors in their approach towards their asset allocation strategies?

Stock Pick
Man Wah Holdings: Neutral (Phillip Securities, 18 Nov), Swiber Holdings: Neutral (DMG, 18 Nov), Armstrong Industrial: Buy (DMG, 18 Nov), Olam: Buy (DMG, 17 Nov), Sembcorp Marine: Buy (DMG, 17 Nov)