Technical View
STI, SIA, Man Wah

Straits Times Index: Strong support below

The magnitude of the fall in the Straits Times Index (FSSTI Index) was worst than our expectations as it produced a low of 2,978 after breaking our support level at 3,035. While the break below the 100-day moving average during last week should translate into further downside going forward in the short-term, we note that this has been achieved through declining volume, an indication that the bearish momentum is not strong.

Nevertheless, in the event that the STI were to continue with its fall, we believe that it is unlikely to break below the 2,930 mark. Besides the technical gap that appeared in Mar-08, the 2,930 – 2,955 support area also encompasses the 61.8% fibonacci retracement of 2,745 to 3,270 – the trading range seen for the year so far. Should the STI continue to trade in accordance with the Elliot Wave principal (as it did previously as written in our earlier report on 31-Mar-08), we continue to believe that the market has already achieved or is nearing a bottom.


SIA: Any rebounds to be limited

While the share price of Singapore Airlines (SIA SP) is approaching oversold levels as evidenced by the 14-day RSI and the break of the lower bollinger band, we caution that a technical rebound may still be off the cards as the violation of the lower band was accompanied with a series of lower highs which suggest that the current downtrend has not yet tapered off. Furthermore, engaging in long positions at present levels also may not be advisable, as the 50 & 100-day moving averages have converged at the technical gap area thus forming a strong barrier that should cap any potential upside.

Nevertheless, should share price continue with its fall, support at the 14.48 – 14.58 range should limit further downside. Resistance meanwhile is present at the 15.46 – 15.76 level by virtue of the aforesaid factors.


Man Wah: Close to bottoming out

Price action of Man Wah (MWH SP) has been bearish for the past month or so although it looks close to bottoming out soon. The downtrend has been attained on the back on declining volume which signifies that the selling has not been strong and more importantly, share price has almost completed the 61.8% fibonacci retracement of the uptrend move from 20-Mar to 20-May. Also, price action has retraced back above the lower bollinger band after having violated it recently, indicating that the selling momentum may have eased. We therefore are not expecting significant downside from current levels.

Support is seen at the 0.245 – 0.25 range as derived from the 100-day moving average, a series of daily lows and the 61.8% fibo move from 0.20 to 0.315. The immediate target price and resistance level is identified at the 0.285 – 0.29 area as depicted by the technical gap.




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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