Technical View
STI, FerroChina

Straits Times Index: Moving ahead

Our bullish call on the Straits Times Index (FSSTI Index) appears encouraging as the index rallied some 75 points during the previous week. Recent price action had also chartered out an uptrend channel which suggests further gains are ahead while the MACD chart is looking positive as it threatens to cut above the centreline. Notably, the surge in the STI was kept in check during the previous Thursday as it hit the upper bollinger band and retraced some of its gains the following day – we view this as a healthy pullback and we believe that the index should close higher for the current week.

Immediate resistance is seen at the 3,010 mark as depicted by the 50-day moving average and the daily high on 26 Jun. Following which, firm resistance in the form of a large technical gap at the 3,085 – 3,146 area may serve to keep the bullish price action in check. Our support level meanwhile remains unchanged at the 2,745 mark as seen from the yearly lows on 22 Jan & 17 Mar, a level which we believe that the STI would not violate based on our current Elliot Wave count.


FerroChina: Potential Triple Bottom formation at play

Price action of FerroChina (FRC SP) is looking to carve out the last leg of a triple bottom formation after it bounced off its recent low at the 1.05 mark in early July, indicating that further upside should be forthcoming. This positive view is supported by the MACD chart as it recently produced a bullish moving average crossover with the RSI still remaining below the 70 mark, an indication that the security is not yet overbought. However, as share price has already touched the upper bollinger band, we caution that share price may consolidate in the near term before staging a breakout move.

Support is strong at the 1.02 – 1.05 area as depicted by the trough of the triple bottom pattern. On the other hand, initial resistance is identified at the 1.40 – 1.46 range, courtesy of a technical gap and the 61.8% fibonacci retracement of 1.74 to 1.05. Should this barrier be broken, additional resistance would reside at the 1.66 – 1.74 area as derived from the peak of the triple bottom pattern.





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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