Technical View – Global Indices

Straits Times Index: Outlook is still positive

Consolidation was the theme for the Straits Times Index (FSSTI Index) as it managed to eke out just a 7-point gain for the week. Nevertheless, we believe that the direction of STI remains positive – the MACD chart is still depicting a bullish picture, while the present Wave 5 that the STI is currently riding on should continue to translate to further price gains. Given the bullish outlook, our recommendation for investors to be underweight cash and overweight equities thus remains although we believe that market interest would be skewed towards the bigger-cap plays.

Initial resistance continues to linger at the 2,763 mark as outlined by the trend high seen during Sep 08 – a break above this level should see the STI appreciate to the second resistance level at 2,830. Support, meanwhile, is identified at the 2,663 – 2,668 range as identified by a series of daily lows.


Shanghai Composite Index: Uptrend remains firm

Better than we had anticipated. The Shanghai Composite Index (SHCOMP Index) shot past our bullish forecasts and broke above previous resistance level at 3,068, reflecting a gain of 4.4% for the week. With the current Wave 3 of 5 still at play that is in turn expected to propel the index to greater heights, we therefore continue to advise investors to leverage on this firm uptrend and buy into the various index-component counters for additional capital gains.

Resistance has now been revised upwards to the 3,406 level as represented by the 161.8% fibonacci extension of Wave 1 of 5. Meanwhile, any pullbacks should be limited to the 2,940 support mark as depicted by the confluence of the 21 and 30-day moving averages.


Dow Jones Industrial Average: The 10,500 level stays within reach

Price action has not turned negative. Slightly out of line with our bullish expectations, the Dow Jones Industrial Average (INDU Index) experienced modest losses for the week as it decreased by 0.2%. Nevertheless, as our Wave Count is staying unchanged at Wave 3, we believe that the uptrend which the index is presently riding on is still intact. Furthermore, the 14-day RSI also remains below overbought territory, thereby signaling that there remains room for further upside.

Our resistance and target is unchanged at the 10,495 mark, courtesy of the 100% fibonacci extension of Wave 1 ( 8,877 – 6,469 + 8,087 = 10,495 ). Support, on the other hand, has been raised to the 9,649 – 9,675 region as depicted by the 50-day moving average and the daily low on 07 Oct 09.


S&P 500 Index: Target remains at the 1,160 mark

Trading inline with the Dow. Not surprisingly, the S&P 500 (SPX Index) continues to move in lockstep with the Dow as it experienced a 0.7% weekly correction. With the present Wave 3 still forecasted to push the index up further, we believe that the S&P is set for a week of gains.

Key levels to monitor. Resistance and target stays unchanged at the 1,159 mark as extended by the 100% move of Wave 1. Support, meanwhile, has been identified at the 1,066 level as outlined by the confluence of the 21 and 30-day moving averages.


Hang Seng Index: Momentum is still bullish

Uptrend remains intact. The Hang Seng Index (HSI Index) experienced a 3.0% weekly gain as it continues to trade above the 22,000 level. Given that the current Wave 5 has yet to run its full course, we therefore believe that additional upside is still possible. Furthermore, the 14-day ADX has been trending up, an indication that the bullish momentum is strengthening.

On track to hit the 23,000 mark. Resistance stays unchanged at the 22,881 – 23,062 area as represented by the technical gap seen during Jul 08. On the other hand, support is now situated at the 21,443 – 21,465 region where the 21 and 30-day moving averages reside.














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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