Daily Markets Briefing: STI up 1.6%

Expect more gains today.

According to OCBC, further gains on Wall Street last Friday could continue to keep local sentiment fairly buoyant again this morning.

Here's more from OCBC:

However, further strong gains may be limited, given that the local bourse is about to show overbought signals; price action has also formed a potential toppish signal; the Nikkei has eased about 0.3% in early trade.

We further note that some of the blue chips are also showing similar toppish and overbought signals, suggesting that a technical correction may be imminent.

As such, we could see profit-taking emerging if the index fails to clear the next key hurdle at 2900; this could send the STI back towards 2800.