Technical View – Global Indices

Straits Times Index: Poised to extend its gains

The Straits Times Index (FSSTI Index) finished the first week of November with a 0.3% gain as it performed against our bearish expectations. Although the low trading volume of late has both served to cap the magnitude of any rallies as well as limit any losses, we note that the index has nevertheless managed to eke out a series of higher lows – this in turn suggests that buyers are still prevalent in the market. More importantly, the breakaway gap that had manifested last Friday appears to have pushed the STI out of its congestion zone – given this positive event, we therefore advocate short-term investors to capitalise on this bullish momentum while it lasts and shift a portion of their cash holdings into equities.

Targeting the 2,740 mark. We believe the present bullish momentum could push the STI up to the 2,740 resistance level – this represents the trading high for 2009 and also outlines where the upper bollinger band is seen. Meanwhile, support is located at the 2,613 – 2,621 area as identified by the lower bollinger band and a series of daily lows.


Shanghai Composite Index: Targeting 3,400

Contrarian call has done well. Our positive technical view on the Shanghai Composite Index (SHCOMP Index) has generally been on the right track as the index jumped 5.6% for the week after attaining a low of 2,923 – even though we had been bearish on the other market indices during last week, we had advocated a "buy on dips" recommendation for investors. Going forward, with the index still riding on the current Wave 3 of 5, we believe that there remains further upside. Additionally, with the 14-day RSI still below overbought levels, we thus recommend investors to stay invested and hold on to their respective portfolios to leverage on this uptrend.

Resistance now at the 3,406 level. Our target and resistance is at the 3,406 mark as this represents the benchmark 161.8% fibonacci extension of Wave 1 of 5 [ 3,406 = 1.618 * (3,068 – 2,639) + 2,712 ]. On the other hand, any shortterm corrections should be limited to the 3,078 support level.


Dow Jones Industrial Average: Attempting to establish new yearly highs

Turning the other way. Performing against our bearish forecasts, the Dow Jones Industrial Average (INDU Index) rallied for a 3.2% weekly increment as the various technical indicators unexpectedly turned positive. Presently, with the bollinger bands starting to expand while a bullish moving average crossover within the MACD chart looks set to occur, we therefore believe that the index would be able to build onto the gains it experienced last week – the current Wave 3 also remains at play.

New highs for 2009 may be seen. Immediate resistance is identified at the 10,143 level as outlined by the upper bollinger band – should this barrier be broken through, the next level of resistance is then seen at the 10,796 – 10,825 region as depicted by a series of daily highs. Support, meanwhile, resides at the 9,700 – 9,743 range as represented by the lower bollinger band and the 50-day moving average.


S&P 500 Index: Turning bullish

A positive turn of events. Similar to the Dow, our bearish expectations for the S&P 500 (SPX Index) were not met as the index increased by 3.6%. Currently, given that the moving averages within the MACD chart is trending up while the bollinger bands have also started to expand, we believe that the momentum for the S&P has turned bullish. Additionally, our Wave Count also stays unchanged at Wave 3.

Pertinent levels to monitor. The upward momentum in the S&P could carry it to the 1,109 resistance mark where the upper bollinger band is situated – should an unexpected bout of profit-taking occur, support at the 1,029 – 1,032 region as outlined by the lower bollinger band could cushion the impact.


Hang Seng Index: In the midst of a bullish breakout

More upside ahead. The Hang Seng Index (HSI Index) finished the week with a small 0.4% increment although it does seem poised to extend these gains. With the HSI having broken out of its consolidation zone in the form of a Symmetrical Triangle during last Friday, this bullish momentum is expected to carry forward into the current week. Furthermore, the current Wave 5 is also forecasted to provide a push to the HSI.

Targeting the 22,600 mark. Resistance and target is located at the 22,600 – 22,620 region, courtesy of the upper bollinger band and the trend high for the year. On the other hand, support is identified at the 21,060 – 21,130 range as depicted by the lower bollinger band.














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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