STI rally running out of steam?

Plus renewed weakness on Wall Street is likely to dampen local sentiment, says OCBC Investment Research.

OCBC Investment Research said:

Renewed weakness on Wall Street is likely to dampen local sentiment this morning and encourage some profit-taking on the recent gains.

While the STI chalked up 0.1% gain yesterday, it was unable to sustain above 3000 level; it also formed a bearish Harami candlestick formation late last week, suggesting that the recent rally is running out of steam.

Expect a possible pullback to 2950, ahead of 2907 (centre of Bollinger band); but expect bargain hunters between those levels as daily MACD is still quite positive.

Initial cap remains at 3000, ahead of 3033 (2012 high).

IG Markets Singapore meanwhile noted:

On the local market, the STI continues to show its resilience as it fought off the bears yesterday to finish marginally in the black as it makes another push to end the day above 3000 points.

It faces the challenge of a futures market pointing to a weaker open this morning, while Japan comes back from a one-day break to see its market down.