Singapore Stock Exchange Technical Analysis

Singapore Stock Exchange (Straits Times Index) has been on a fantastic upwards surge since Oct 2011. The upwards surge has been punctuated with a few big drops as well but the STI always recovered strongly each time. The strength of the prices aside, the technical analysis needs to look deeper into the fundamentals of momentum and volume to determine the exact nature of the rise.

Below is the daily chart of the Singapore Stock Exchange. We start our review from the beginning of the upwards surge at 2521 on 05 Oct 2011. As can be seen on the chart, there has been four major surges and three corrections. The first three upwards surge has been of almost the same length in price. These waves are both the W (in amber) and Y (in amber). If we assume that the final Y (in amber) is also going to be of the same length, then we get a projection of 3321.

STI Elliott Wave Chart 05 Jan 2013 Primary Count

If we take the Intermediate wave (W), and assume that Inter (Y) will be of equal length, we then get a projection of 3209 which has been surpassed. The Singapore Stock Exchange is also sitting close to the top trend line of the upwards channel.

Next, let’s take a look at the volume. See how the volume was rising with STI in the first three legs. In this recent leg though, the volume has been decreasing. This is an indication of weakening demand. The MACD too has been making a diverging peak with each leg up. This is another indication of weak momentum.

The volume and MACD are indicating weak momentum with each leg up. The Singapore Stock Exchange is also within two price projections of between 3209 and 3321. This leads to the conclusion that the STI is looking toppish and a pullback can be expected soon.

The next question is whether is that going to be a healthy pullback or is that going to a trend change to the downside. We will get to answer that question as the market unfolds. Picking tops is extremely difficult and so it is better to wait for a lower high, lower low setup.