With the uptrend losing momentum, it is time for consolidation

The STI has not been staging aggressive reactions in the past week simply because most of the good news and anticipation of a vaccine has been fairly priced in. At the moment, the 9 and 20 days MAs still have not crossed but there is not much progress from last week’s anticipation of the 9 MA crossing or bouncing. However, the monthly chart is starting to show some signs of good news as the MACD is signaling a trend reversal. Personally, I am going to assume that STI is in for a period of consolidation because we are sort of in the eye of the COVID storm as the rest of the world still struggles to recover from their new waves of infection and economic upheaval.

STI – Updated Daily Chart

Understandably, the daily chart is showing little activity when late comers rushing in to look for bargains while institutional investors are starting to sell to take profit. This resulted in the rise and fall of the STI as both sides of investors differ in terms of whether STI should rally ahead or not. If you noticed, the 100 days MA has also just crossed the 200 days MA that means that the trend reversal is significant so far hence I am not expecting huge dips in the near term.

STI – Updated Monthly Chart

At long last, the monthly chart is starting to show that there is hope for the index, as the MACD signals a trend reversal as well. This is a huge step for the index as the 12 and 26 EMA hasn’t crossed since August 2019. Although we might be seeing further sideways consolidation, it will not reversal this signal on the monthly chart.

Author’s Call as of 20th December 2020

• Good news and positive sentiments are all priced in hence the consolidation
• late coming investors are still rushing in for a bargain while institutional investors are selling for a profit
• MACD on monthly chart signals the first trend reversal since August 2019
• Value of STI constituents are starting to surface as price stabilizes

Author’s Call as of 13th December 2020

• The hype is dying off but there is little reason to feel a big sudden drop as STI is still lower than pre-COVID
• Holiday mood around Singapore is boosting certain counters but the uncertainty remains for counters relating to international visitors
• 9 days MA likely to make a sudden move in the coming week but there is little reason to think that either direction is more likely
• Many counters in STI are starting to move in a non-uniform manner meaning the recovery of certain stocks are likely to be genuine