After the sudden retracement, what’s next?

Out of a sudden, vaccine news and new virus outbreaks are temporarily muted while the whole world’s attention turned to Myanmar’s Military coup. Evidently, the pandemic has led to many issues even within some governments. Without the presence of a strong government, the country and economy will cease being stable and affect all citizens and trade partners. After last week’s shift of attention from the economy, we should be expecting financial reports to be the main topic discussed moving forward. Also with the 1.9 Trillion dollar bill passed by the Senate, we should be expecting another bull run once approved by the House of Congress, as the market as the global stock markets continue to benefit from the excess liquidity.

STI – Updated Daily Chart

The STI’s daily chart exposed the weakness formed by the gap during the early days of the financial crisis caused by the pandemic. Right now STI is still slowly trending upwards as it exercises caution before the rest of the world continue to stabilise and manage their own circumstances. Being an index weighted by finance and real estate sectors, STI still finds itself below pre-COVID levels as it reflects the country’s weakened economic state.

STI – Updated Monthly Chart

February is still green at the moment even after a correction, this shows the index’s resilience in the past 2 weeks. As STI trends closer to the 20 Month moving average, we expect the 9 Months moving average trend closer towards it as well before we can confirm that the downtrend is over from a technical perspective. Will the CNY ahead provide a boost to the markets in the coming weeks? Let’s look at how things go in the coming week before that as the first few financial reports will set the mood for the rest of the companies.

Author’s Call as of 7th Feb 2021

• Political stability strengthens around the world as Myanmar’s example reinforces the need for a strong and stable government
• US bill to be cleared soon after being approved by the senate supporting risk assets and markets in general
• STI technical correction might be over but investors are still wary of the timeline before further global recovery from the pandemic
• Financial reports of companies will roll out soon and set the tone for the economy

Author’s Call as of 30th Jan 2021

• The recent episode between retail and institutional investors sparked off a market correction which affect the STI as well
• The STI correction was inline with the rest of the world in the past week and its futures continue to trend lower after market closed
• Chart wise, the index is trying to break the 3000 support level convincingly before heading to 3100 (50 months moving average)
• Continue planning and set price targets to buy back or accumulate if you have missed entry points previously