Technical View
STI, Biosensors, Chartered Semiconductor

Straits Times Index: Expect some respite for the week

Expectations that the 2,660 level would hold for the Straits Times Index (FSSTI Index) were not met as market sentiment took on a very bearish tone during the later part of the previous week. After losing 165 points in Sep 08 so far, the 14-day RSI is now trading below the 30 mark, an indication that the STI is oversold. We note that although that the STI has plunged 26% (or 908 points) for the year, the RSI has only depicted eight instances of being oversold. Out of these eight instances, we also note that the STI has always managed to stage a rebound within the following week after the RSI hits below the 30 reading.

While it is debatable as to whether this potential rebound may fizzle out, we are at least expecting the STI to post some gains for the current week. Support is seen at the 2,554 level while initial resistance is identified at the 2,585 – 2,626 area as defined by the technical gap and the lower bollinger band. Further resistance is available at the 2,686 – 2,706 range, courtesy of another technical gap.


Biosensors: Downtrend may have ended

In an earlier report, we mentioned that the rally Biosensors (BIG SP) had been experiencing was losing steam. After hitting our former resistance level at the 0.645 mark, share price then began losing ground as it closed at 0.52 during the end of the previous week. We now believe that the correction period is already over and that price action is poised to recover.

The 14-day ADX has started turning downwards, an indication that the present downtrend is weak. Furthermore, share price had rebounded nicely after it had touched the lower bollinger band at the 0.505 mark and we have identified this as part of our 0.495 – 0.505 support level. Meanwhile, should this current rebound continue, initial resistance residing at the 0.555 level may cap further upside. In the event that this barrier is broken, the 2nd resistance is seen at the 0.605 – 0.615 area as derived from the technical gap.


Chartered Semiconductor: Grossly oversold, rebound is forthcoming

Chartered Semiconductor (CSM SP) reached its all-time low on 05 Sep with its 14-day RSI coming in slightly above a reading of 10, strongly suggestive that the underlying security is way oversold. More importantly, the RSI is currently depicting a positive divergence relative to its share price, an indication that the selling pressure may be coming off. Furthermore, we also note that ever since price action had produced a spike down on 01 Sep, trading volume has been tapering off, signifying that the present downtrend may be losing strength.

We believe that a technical rebound should be forthcoming – resistance levels are identified at 0.43 and 0.49, courtesy of their respective daily highs. Meanwhile, support at the 0.395 level as depicted by the lower bollinger band and the alltime low on 05 Sep should be able to keep any additional downside 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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