Technical View
STI, Cosco Corp

Straits Times Index: Charting out a Double Bottom

The potential breakout move arising from the symmetrical triangle formation seen for Straits Times Index (FSSTI Index) as we have mentioned during the previous week has now occurred to the downside with the index having lost some 100 points in the process. However, we had chosen not to adopt a bearish stance as we also believed that the underlying trend for the STI was still positive – this is seemingly the case now as the index is presently carving out a double bottom pattern, a reversal formation that indicates the current downtrend would turn into a bullish one.

By virtue of the double bottom pattern, support level for the STI is identified at the 2,800 mark where the trough resides. Additionally, this level also represents where the lower bollinger band is currently trading at. On the other hand, we believe that any upside seen in the STI would initially encounter resistance at the 2,900 level, courtesy of the 30-day moving average and the trend high on 06 Aug. Should this barrier be broken, further resistance would be available at the 2,980 – 3,000 area as depicted by the peak of the double bottom and the upper bollinger band.


Cosco Corp: Crucial support at the 2.32 level

Share price of Cosco Corp (COS SP) had produced a breakout move to the downside just after it had consolidated during late Jul 08 when the bollinger bands had tightened. Although the RSI is looking grossly oversold as with most other technical indicators, we caution that there have not been strong signs of a reversal from the current downtrend.

Nevertheless, trading action during the previous Friday on 08 Aug had seemingly produced an inverted hammer candlestick pattern which is showing scant signs of an impending reversal. With the support mark at 2.32 (as depicted by the trend low in Feb 07) close to the current price, we believe aggressive traders may consider accumulating at present levels for a technical rebound up to the 2.57 – 2.65 area as the risk-to-reward ratio is favourable.




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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