Technical View – Global Indices

Straits Times Index: Expecting a gradual uptrend

The magnitude of the ascent within the Straits Times Index (FSSTI Index) was below our expectations as it finished the week with just a 1.2% increment. For the present week, although the Wave Count of the STI (currently remaining unchanged at Wave 5) stays on a positive note while the MACD chart is still appearing to be bullish, we believe that the depressed share trading volume of late would serve as a dampener to any extended rallies. Therefore, although we do anticipate the STI to extend its gains into the week, we recommend short-term traders to instead engage in some scalping as we are expecting only a muted uptrend on lacklustre trading activity.

Resistance is now situated at the 2,829 level as represented by the trend high on 14 Aug 08. On the other hand, support is being outlined by the 50-day moving average at the 2,680 mark.


Shanghai Composite Index: Target of 3,400 remains on track

Continues to be on track. The Shanghai Composite Index (SHCOMP Index) continued to perform in accordance with our bullish forecasts as it appreciated by 3.8% for the week. Presently, with the Wave 3 of 5 still at play, we continue to believe that there is yet further room for the index to appreciate. One cause for concern, though, would be that the 14- day RSI is now slightly overbought, suggesting that a top is about to be put in place. Given that we believe that a pullback might be occurring around the 3,400 mark (equating to an upside of some 92 points from current levels), we recommend the risk-adverse investors to take some profits off the table while the short-term traders can still try to leverage on the remaining upside.

Our target and resistance remains at the 3,406 mark as this signifies the benchmark 161.8% fibonacci extension of Wave 1 of 5 [ 3,406 = 1.618 * (3,068 – 2,639) + 2,712 ]. Meanwhile, support level has been raised to the 3,206 mark where the 14-day moving average is located.


Dow Jones Industrial Average: Trend remains positive

Positive Wave 3 still at play. The Dow Jones Industrial Average (INDU Index) finished the week with a 0.5% gain as it performed inline with our bullish expectations. With the expanding bollinger bands and the MACD chart still emitting a positive signal, however, we remain committed to the view that the index would be primed for further upside as it continues to ride on the current Wave 3.

Resistance is unchanged at the 10,796 – 10,825 area as represented by a series of daily highs. Support, meanwhile, is now identified at the 10,020 – 10,040 region as depicted by the 30-day moving average.


S&P 500 Index: Performing inline with the Dow

Technical indicators are supportive of uptrend. As with the Dow, Wave 3 within the S&P 500 (SPX Index) remains at play, signifying of more upside ahead. Furthermore, the 14-day ADX has been moving up of late, an indication that the uptrend is solidifying. Coupled with the expanding bollinger bands, we therefore believe the overall technical picture of the S&P is still bullish.

Key barriers to monitor. Resistance is outlined by the upper bollinger band, presently which stands at the 1,123 level. On the other hand, support is now situated at the 1,059 mark as identified by the trend low on 06 Nov 09.


Hang Seng Index: Still targeting the 23,330 area

Expecting to turn around. The actual outcome did not pan out in accordance to our script as the Hang Seng Index (HSI Index) consolidated with a 0.4% weekly loss, even though the decline was rather minute. Nevertheless, with the unfinished Wave 5 that is set to push the HSI higher, we are regarding any market corrections as only short-term aberrations. We thus recommend investors to adopt a buy-on-dips trading strategy.

No robust resistance is available until the 23,229 – 23,369 level, courtesy of the upper bollinger band and the trend high seen on 24 Jul 08. Support, meanwhile, remains at the 21,549 – 21,780 range 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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