STI Outlook - As of 19th July 2020

Let the uptrend begin?

Last week’s STI market outlook featured the potential crossing of 9 and 20 MA on both the daily and weekly charts. Right now both 9 MA has crossed 20 MA and that suggests a trend reversal from down to uptrend. That said STI did close lower than last week, as the market reacts to the poor economic performance of Singapore’s GDP. In this week’s analysis and insights, we will be focusing more on technical analysis than fundamental analysis. This is because there isn’t going to be much news announced in the coming week with regards to the economy.

STI – Updated Daily Chart

Is this trend reversal a false alarm?

The daily chart is resting on the lower limit of the parallel channel drawn since the low of April. At the moment, there isn’t much incentive for STI to trend lower and breaking support levels. This is because the market has already been anticipating the poor GDP contraction before the announcement, Furthermore, The banks are also showing resilience in the past week as MAs prepares to wind down on COVID-19 measures for banks.

STI – Updated Weekly Chart

9 weeks MA just crossed 20 weeks MA

On the weekly chart, STI closed above 20 weeks MA and rested on 9 weeks MA on Friday. This resulted in the long-awaited crossing of both 9 and 20 MAs, suggesting a bullish signal. As mentioned last week, this trend reversal is long-awaited as the 9 weeks MA has stayed below 20 weeks MA since 24 Feb. Overall, STI is likely to hover above 20 weeks MA, though 20 weeks MA is still trending lower at the moment.

Author’s Call as of 19 July 2020

9 and 20 MA crossed at last week’s closing, suggesting a trend reversal (since 24 Feb 2020)

Banks are showing resilience because MAS intents to reversal the COVID-19 measures

STI is resting above daily chart support level on the parallel channel

US Indices closed about 3200 showing market stability, VIX is also 30 points. (prime for STI to climb)

Author’s Call as of 12 July 2020

Ruling party’s interest in GLCs could be strengthened after the election is over

Both the daily and weekly charts are showing signs of a trend reversal using 9 and 20 MA

More full-year results will be reported in the coming weeks and some of the reports released have been rather bleak. (E.g. SATS not paying final dividends)

Opportunities to accumulate is still present at the moment if the general uptrend is still intact