Is the STI in for another period of consolidation?

After the recent Q3 financial report from some prominent companies, it is obvious that recovery from the impacts of the pandemic is protracted. On the other hand, companies are reacting accordingly to stage an adequate recovery in financials to ensure that investors continue to stay confident in their company’s long term trajectory. Most noticeably, companies are restructuring their businesses and divesting assets to boost their balance sheets for acquisitions or simply to tide past the rest of 2022 perhaps? At the moment, investors are still sitting on the fence and trading vigorously to take advantage of price movements caused by the announcements but the longer term trajectory continues to be more positive as well. However, it would be prudent to carefully allocate your capital as our economy rallies further in the coming year.

STI – Updated Daily Chart

The daily chart shows that investors are still wary of the performance of some sectors that have reported performance poorer than pre-pandemic times. Understandably, we should be seeing some near term consolidation for some counters and notice minimal changes to the STI until companies show a more significant jump in their earnings.

STI – Updated Weekly Chart

We are switching back to the weekly chart to take a look at why the STI is facing some resistance last week. As mentioned before, there are multiple resistance levels ahead before STI can rally further. Based on the current situation where businesses are still carefully returning to normalcy, we should also manage our own expectations and take advantage of the volatility for some of our counters.

Author’s Call as of 12th November 2021

• Recovery appears to be protracted after prominent companies on the STI reports Q3 performance
• The STI ended the week with a relatively solid red candle pushing the index lower than last week’s closing
• The absence of a clear recovery from the pandemic lowers investor’s confidence to buy and hold, leading to higher volatility
• Overall, recovery is to be expected but near term volatility is inevitable, investors should take on a more reflexive approach when dealing with some of their counters and allocate their capital accordingly

Author’s Call as of 6th November 2021

• Singapore’s economy will continue to benefit from the reopening of borders as well as the new COVID-19 drug (when available)
• The charts basically supports further upside for the STI as they have broke out of resistance levels marked out prior to this week
• We should be seeing STI touch 3300 resistance if the news continue to rave about the developments on the COVID-19 drug
• As a rule, do not take any spike or dip for granted, study all of your counters on your watchlist carefully so that we can make decisive trades when the market overreacts