After last week’s rally what’s next?

The index wide hysteria occurred a week after the US’s election dust settles. Congratulations to STI investors who have made neat profits from your undying support for weakened and fear-stricken counters on STI. As investors, let’s continue to be forward-looking and rational as much as possible and that is to plan ahead for the coming week. After a week of massive gap ups and erratic price movements due to the vaccine news boost and ‘HK-SG travel bubble’ excitement, it is likely that some stocks that have been riding on the wave will start to recede and fall back. Besides that, greed for certain counters will not dissipate until fear strikes in, be sure to take profit when there are sudden spikes without accompanying news items supporting the price movement. Otherwise, stay calm and as always plan ahead before Monday comes.

STI – Updated Daily Chart

The anticipation of an effective vaccine caused the massive gap up for STI and it has been holding relatively stable last week. That said, I am pretty sure that the hype will dissipate and most parasite counters will start to retrace back to support levels. As for massive jump counters like SIA and SATS, be sure to watch closely or sell them if you have already yielded a decent profit.

STI – Updated Weekly Chart

On the weekly chart, STI is still going strong after a long sideway (slight downtrend) consolidation phase. While this is not going to replicate itself indefinitely, we are unsure when the peak will surface. At the moment, the next Fibonacci resistance level is around 2940. Personally, I will expect reactions from both directions and will be taking action when the price movement is too extreme in a short period of time.

Author’s Call as of 15th November 2020

• STI massive spike is a sign of stocks regaining value from the oversold state
• Some counters are riding on the market’s euphoria and will not be sustainable
• Trump’s reluctance to concede the White House is slowly the rise of the index as well
• Objectively, many companies are still in a weakened state and the news is still trying to point to the severity of the pandemic for obvious reasons (newsworthiness)

Author’s Call as of 8th November 2020

• STI substantial rebound is partly due to many counters that are oversold last week
• A plausible Biden win will help Asian markets as Biden’s Government will promote stability in the global economy.
• The global economy is still aware the pandemic situation is worsening in Western nations
• Potential correction of the US markets might overflow to STI I the event of a corporate tax hike following Biden’s win