The trend for the STI has been down since the start of 2011. It started at a peak of about 3280 on 6 Jan 2011 and reached a low of 2932 on 15 Mar 2011.
Is it a good time to go bargain hunting now? The STI is now trending below both 50day and 200day moving averages. A minor rally from late February managed to break above the 200day moving average line, but turned down at the 50day moving average at 3100 then. Hence the 50day moving average is acting as a strong resistance for now.
However, the MACD paints a different picture. The STI made a lower low on 15 Mar 2011 compared to the low on 24 Feb 2011. But, the MACD appears to make a higher low. This is what is known as a bullish divergence and there is a strong chance that the STI will rally from this new low. Key condition for this to happen would be for the STI to close above 3000 points soon.
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