STI Outlook - As of 26th July 2020

Parallel channel did not hold but new hope is found in lower channel

Readers of this blog would have realized that the previous week’s parallel channels are marked out based on fairly conservative data points on STI’s daily chart. While the index continues to trend sideways, investors are starting to get wary as the number of infections is on the rise again. That said, I wise to point out 2 salient points about the “news” that is related to COVID-19. 1) Infection numbers will not lead to nationwide business closures because countries basically cannot afford it anymore. 2) International Travel will soon resume partially because of the nature of some jobs which will be otherwise rendered obsolete. While the concerns about health continue to be a risk for people, many governments and business owners have also realized that the new norm cannot be one without travel and social interaction.

STI – Updated Daily Chart

Parallel channel has been adjusted to add the lowest data point of 23 March

Step by step, STI is bouncing in anticipation of good news to resume businesses and services to pre-COVID times. While we are still unsure when that would happen, we can tell that STI is still consolidating on the daily chart and is on the verge of breaking the last possible parallel channel (extension of the new peaks after the crash in March.

STI – Updated Weekly Chart

STI resting on 20 weeks MA at closing on the weekly chart

STI is moving sideways because many businesses are not announcing better than expected performance in the past week. In the coming week, more companies on STI will be releasing their announcing financial results as well therefore most investors are still taking the backseats or selling in expectation of further downside.

Author’s Call as of 26 July 2020

STI has broke the parallel channel marked out in previous week’s analysis.

STI is still consolidating sideways at the moment in anticipation of flat poor economic performance.

More businesses continues to resume gradually (including international flights)

US indices are experiencing a mild correction as the market faces uncertainty in relation to both internal and International policies with China. (Also, FANGs are also announcing their financial results in the coming week)

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 reverse COVID-19 measures to interest rates

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)