The STI could experience a temporary consolidation but the uptrend is likely to stay intact. The HSI has broken out of a base.
The Straits Times Index rose just 13 points week-on-week during Jan 17-21, when the index attempted to consolidate some gains. However, the local banks continued to gain ground. As a result, the STI ended the week at 3,294, although an intra-day high of 3,296 was registered, suggesting that the roundophobic 3,300 level may provide some psychological resistance.
Any retreat should stop short of the 3,240 level. This was a breakout level and should provide support for retreats. The break above this level on Jan 11 indicated a target of 4,000 which is a new high when measured against the old high of 3,831. The upside represents potential and these targets are not cast in stone. The biggest drivers of the uptrend are likely to be the banks which are experiencing a tailwind in the form of rising interest rates.
The Hang Seng Index continues to recover and ended the week of Jan 17-21 at 24,965, up 1,637 points week-on-week. During the week of Jan 17-21, the HSI broke out of a minor base formation at the 24,400 to 24,438 range, with a simultaneous break above its 50-day and 100-day moving averages at 23,931 and 24,600 respectively. The breakout was supported by volume expansion and an upturn by quarterly momentum. As such, it indicates an upside target of more than 26,000. Any retreat finds initial support at 24,400. With indicators turning positive, the HSI could well embark on a recovery of sorts and form an uptrend.