Dear readers,

Two weeks ago, I mentioned that there is likely to be profit taking on the STI. STI has since fallen 85 points, or 2.9%. What lies ahead?

S&P500 Index

Just to recap what I have mentioned on 9 Dec 2016 (see HERE), I wrote “S&P500 is on a clear uptrend amid rising EMAs and ADX, on the backdrop of positive placed directional indicators (“DIs”). RSI closed around 77 on 9 Dec 2016. This is overbought and at a 3-year high. Indicators such as OBV, MACD and MFI continue to exhibit bearish divergence with price. Although bearish divergences can continue for some time, it is a cause of concern. My personal view is that S&P500 may consolidate its heady gains in the next two weeks with near term potential upside capped around 2,275.”