Technical Analysis
Singtel Breaking Key Support
DBS Heading Lower
Singtel, Weekly
Breaking Key Support. Last week, Singtel tested the S$3.00 level. This is a key
support level for Singtel for several reasons. Firstly, it is the March 2007 low.
Secondly, it is the 200 week moving average. Thirdly, the S$3.00 mark is
psychological support. We saw a small rally off this level last week, indicating buying
interest. However, buying failed to push prices higher than last week's open and as of
this report we are currently trading near the S$2.90 level, below last week's low of
S$3.01. Buying interest at the confluence of technical support at the S$3.00 has
already been exhausted and a close this week below last week’s low of S$3.01
would indicate the path of least resistance for Singtel is down. More aggressive
readers might want to short on a daily close below S$3.01. Expect to find support
around the S$2.80 level. This is a confluence of August 2005, March 2006 and May
2006 highs. Upon clearing this level, there is no support until the S$2.40 to S$2.36
level. Readers should also note that Singtel is considered a defensive stock and is
likely to have a slower rate of decline relative to other more volatile stocks such as
Keppel Corp.
DBS, Weekly
Continuing to decline. We saw a sharp rally in DBS off the S$15.50 to S$15.40
region 3 weeks ago, sending DBS to a high of S$17.30. Price has since continued to
trend lower and as of this writing stands at the S$15.00 level. This indicates to us that
the S$15.50 to S$15.40 region is no longer considered support by the market. A
close below last week's of S$15.46 low would indicate that DBS is heading lower.
Similar to Singtel, more aggressive readers might want to short on a daily close
below S$15.46 instead of waiting for the weekly close. There is no support until
S$13.90 and subsequent support is at S$13.20.
STI Weekly
Stay on the bear side. We have seen a precipitous decline in the STI since closing
below the 200 week moving average 6 weeks ago. This has taken the STI down
about 700 points from 2700 to near the 2000 level. The STI is what Elliot Wave
theorists call a "Wave 3 decline". It is marked by a drastic increase in downside
momentum and a near vertical plunge. The decline is anticipated to continue until at
least the psychological 2000 level where we should see some support. In such sharp
sell-off conditions, this support might only be visible on the daily charts, or even intraday.
Upon clearing 2000, there is no support until the 1915 to 1900 region, the 50%
retracement from the all time high. The 1860 to 1800 region should provide the
market with decent support. It is the confluence of the January 2004 high, March
2002 high and is also a round number. Readers are strongly encouraged to stay on
the bear side of the market and avoid buying during this sharp decline.
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