The recovery hype is over, back to undervalued growth stocks

The boring stock hype is over and now we are probably back to growth stock rallies. That said, I believe that the market is more selective than ever because of the geopolitical conflict and instability that has been worsening due to the war. In the near term, global market volatility is expected but for STI, we will start to see more sluggish price action for stocks which are particularly stagnant due to the lack of growth. This is because institutional buyers are being pressured yet again to beat the record inflation rates in the world. Therefore, be prepared to see more market rallies amongst riskier assets in the Singapore market.

STI – Updated Daily Chart

We are slowly heading towards 3225 levels if there are no further stimulus but as mentioned, do expect growth assets to move violently when there are triggers in particular sectors such as manufacturing and tech counters.

An unsuccessful breakout attempt by the STI has pushed it back to the 20 day MA and it seems like last Friday’s candlestick did maintain above it however, we should not be too optimistic at the moment as there are still concerns about supply chain issues and some obvious mispricing that will be corrected during this period.

STI – Updated Weekly Chart

The weekly chart is relatively stable for now as Singapore is hardly involved in the geopolitical instability between major powers. We might be implicated and that would eventually show on the charts.

Author’s Call as of 9th April 2022

• Look out for counters that are obviously overpriced during this period of time as their price volatility will be more extreme as new buyers exercise DCA
• Daily chart show that STI is heading back down and currently on track towards 3225 levels
• The weekly chart still looks like STI is stable but retreating at the moment
• Investors should take a break during this period and place advance orders for stocks that they sold during the recovery hype. Otherwise, look out for growth stocks that were left behind during the interest rate fears

Author’s Call as of 2nd April 2022

• Investors can slowly move from investing in sectors to individual stocks as companies will start to recover independent of government support schemes.
• The daily chart shows that the caution market is still waiting for more hard evidence before it is willing to advance
• April started well but it is still too early to tell since many counters are peaking in the past week
• Switch from a sector or recovery optimism play to a more nuance investing approach as the world will carefully evaluate performance post covid and inflationary impacts.