Technical View – Global Indices

Straits Times Index: Selling to accelerate upon the break of the 2,600 level

Against our forecasts. The Straits Times Index (FSSTI Index) did not perform inline with our bullish expectations as it shed 2.2% for the week and tested the 2,600 support mark. Wave Count for the index is presently murky – Wave 5 may have ended at the 2,707 level earlier while Wave A could possibly be at play currently, implying more downside ahead. Furthermore, the 14-day ADX has started to move up, indicating that the present downtrend is gaining strength.

We recommend vested investors to sell upon the break of the 2,600 support mark, as this would signal that additional downside is forthcoming while the bearish sentiment gains momentum. Should this pertinent support level be broken below, we expect the STI to drop to its next support area at the 2,529 – 2,532 range within the end of the week. Meanwhile, resistance remains unchanged from the previous week at the 2,696 –– 2,707 region.


Dow Jones Industrial Average: Correction to continue

A healthy correction. The Dow Jones Industrial Average (INDU Index) finished the week with a 1.8% loss and performed against our bullish forecasts. Going forward, while we believe that the present Wave 3 is expected to propel the index higher over the medium term, this present correction that it is currently experiencing seems poised to extend itself – the MACD chart has just produced a bearish moving average crossover, implying that additional downside is forthcoming.

However, we note that there are several layers of support just above the 9,000 mark – the first level is seen at the 9,252 – 9,262 region while the second support is located at the 9,116 – 9,134 area. Vested investors looking to time the market are recommended to cash out at current levels and buy upon a bounce off the 2nd support mark. Resistance, meanwhile, is identified at the 9,823 – 9,834 range as depicted by a series of daily highs.


S&P 500 Index: Continues to correlate with the DJIA

Bearishness to persist. Performing inline with its counterpart, the S&P 500 (SPX Index) also turned in a negative performance as it lost 1.8% for the week. Similar to the DJIA, while the present Wave 3 is still expected to push the index higher over the medium term, the short term outlook is painting a negative picture. Moreover, the 14-day RSI remains above the 30 mark, indicating that it is not yet oversold.

Key levels to note. Resistance at the 1,065 – 1,069 area as defined by a series of daily highs is not expected to be broken above. On the other hand, support has been identified at the 992 level, courtesy of a series of daily lows – investors looking to engage in long positions are advised to buy a bounce off this support mark.


Hang Seng Index: More downside ahead

The Hang Seng Index (HSI Index) turned in a dismal performance as it lost 3.2% for the week, performing against our forecasts for consolidation to occur. While our Wave Count remains unchanged for now (currently at Wave 5), more downside seems to be forthcoming as evidenced from the bearish moving average crossover within the MACD chart. We therefore advocate vested investors to liquidate their respective portfolios at current levels before the selling momentum intensifies and await a better entry level.

Resistance is seen at the 21,065 – 21,090 area as identified by a series of daily highs. Support, meanwhile, is found at the 19,368 – 19,425 region where the end of Wave 4 and the 100-day moving average is outlined.














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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