Vindication for all STI investors

STI rallied hard on Thursday and Friday in support of Biden’s presidency supported by Congress. At the end of the week, STI closed with a solid candlestick and appears to remain strong on the futures as well (345 for SING at the time of writing). The question herein is “are we out of the woods?” At the start of this year, STI already performed poorly compared to other indexes due to its heavy reliance on its bank stocks. With Biden starting a new term on 20 Jan, banks will likely see more support and reassurance that decisions made for interest rates will be based on the needs of the economy. Although we will still expect some level of pull back when default levels start to increase when subsidies or debt moratorium expires. SG’s 2021 budget will likely be an expansionary budget again to help support the recovery of the Singapore economy therefore it is no doubt that the negative impacts will be alleviated. Besides that, the vaccination program has also begun in SG and that also provides additional support for the market as the number of new daily cases remains low.

STI – Updated Daily Chart

STI heading towards the breakout zone (~3000) after escaping from the horizontal consolidation zone. Right now institutional buying is responsible for the surge in pricing as there are many waves of irregular increase in buying if you noticed individual stocks’ trade summaries.

After minor adjustments, STI daily chart still shows that it is not entirely out of the woods. Rationally speaking, we might be seeing some level of pullback soon but the timing and the end of the rally will unlikely be an obvious one. The reason because those panic buyers coupled with wrongfully executed DCA will help support the price for the near term if STI stays above 3000 at the end of the trading day.

STI – Updated Weekly Chart

The weekly chart shows that STI is trending above 100 Weeks MA and is heading upwards for now. There is still a small gap before STI hits 3000 hence there is likely an attempt to break out of 3000 and that will also trigger a new wave of buying again however short-lived.

Author’s Call as of 9th Jan 2021

• STI seemingly out of the woods with the support of Biden’s Presidency approved by congress
• Vaccination program kicked off in SG and new cases remain low
• Eagerness to return to 3000 is also pushing STI higher in the near term
• Pullback expected due to various reasons but hopefully will be alleviated by SG 2021 budget

Author’s Call as of 2nd Jan 2021

• The STI is still sluggish due to its lack of appeal relative to other markets and asset classes
• STI consolidation is extended due to the resurgence in cases and partial lockdowns around the world
• Domestic markets reopened but the market expects revenue to drop significantly due to a lack of international visitors
• The index continues to show potential for recovery but is still waiting for the next positive trigger