Daily Markets Briefing: STI up 1.12%

Expect muted gains today.

According to OCBC, gains on Wall Street were modest on Monday as investors appeared to pause after last week’s rally. Trading volumes were thin, with most banks, federal institutions and U.S. bond market closed for holiday.

With Wall Street shut overnight, the local bourse will probably look to China for cues today; the Nikkei is down about 0.5% in early trade, OCBC said.

Here’s more from OCBC:

But following the STI’s 1.1% climb yesterday, the index has put in eight up sessions since bottoming at 2740, and the RSI has also risen to around 65%; this suggesting that a technical correction looks likely soon.

Technically, the STI could run into a pretty stiff hurdle around 3061 (50% retracement of the fall from 3383 to 2740 plunge); we think the index may find it a little tough to overcome for now.

And as before, we believe that any near-term pullback is likely to be shallow and find pretty decent support around 2985 (38.2% retracement of the same fall), should 3000 support give way.