Technical View
STI, SPC, StarHub

Straits Times Index: Oversold but still falling

While we had formerly identified the 1,792 – 1,824 range as a potential support area for the Straits Times Index (FSSTI Index), we had also mentioned that further declines south of this level may still be possible. With the various technical indicators looking bearish and only slightly oversold, the STI lost more than 270 points and hit a low of 1,590 during the previous week.

The 14-day RSI is presently still looking oversold and we expect it to remain this way for at least the first half of the week, although we do believe that a minor technical rebound would materialise in the later part of the week as with what the index had experienced during mid-Oct. Focusing on the bigger picture, however, we believe that the STI is still within a Wave C and is now targeting the 1,391 mark – this equates to the 161.8% move of Wave A, after the current Wave 5 of C had tumbled below the 1,600 level and is poised to decline even further.

Any potential rebounds would be restricted to the 1,722 – 1,735 resistance area. Should this level be broken, further resistance at around the 1,800 level in the form of a technical gap would be available to cap any additional upside.


SPC: Grossly oversold

Share price of SPC (SPC SP) has been very bearish of late and is looking much oversold with the 14-day RSI coming in at a reading of 14 which represents a 10-yr low. Given that trading volume has been on the decline for the past three days during the peak of the selldown, we believe that the bearish momentum may be losing strength. A technical rebound may therefore be forthcoming.

Support should be strong at the 1.86 – 1.89 area as represented by the consolidation lows during Feb 04. Should a technical rebound occur, initial resistance at the 2.42 – 2.45 range may serve to cap any further upside. A break above this level would encounter the 2nd resistance point at 2.74 – 2.95 as defined by the technical gap.


StarHub: Consolidation with an upside bias

Price action of StarHub (STH SP) looks to be carving out an Ascending Triangle pattern which implies that a breakout move to the upside may be forthcoming. Nevertheless, as the pattern still seems to be forming, we anticipate that the current consolidation period may continue for the next few days before this potential uptrend occurs. However, the technical indicators are presently depicting bullish signs – the MACD chart has produced a bullish moving average crossover while the 14-day ADX is losing strength, signifying that the recent downtrend has been shedding momentum.

A clear break above initial resistance at the 2.16 – 2.19 area should propel share price all the way to the next resistance level at the 2.39 – 2.42 range where a technical gap resides. Should price action turn bearish from current levels, however, initial support at the 2.02 – 2.04 area would be available to cap the downward momentum. Additionally, further support is seen at the 1.87 mark, courtesy of the trough of the Ascending Triangle formation.






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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