STI is ready for another “expected” reaction

In the past week, STI managed to stay airborne despite the turmoil in the global markets. Apart from the aviation and tourism industry which might be recovering in the second half of 2021 when recreational travel resume, other sectors like retail and real estate continues to stay weak. While STI is understandably excluded due its reliance on the finance industry, I certainly feel that this stability might be fleeting. With the 1.9 trillion US bill supplying investors with a new load of confidence in the US market, I can’t help but wonder if it will tilt the games back 2 weeks ago. In this week’s post, I will be pointing out some signals which might caution investors in the near term. Of course, these signals are far from conclusive and as usual can only be confirmed in retrospect.

STI – Updated Daily Chart

On the daily chart, STI is stuck at the gap formed before the pandemic. At the 3100 level, we should not be aiming for a further rise as the economy in Singapore have not recovered to pre covid levels. Unlike other markets which are weighted by tech companies which businesses were less affected during the pandemic, STI might not be out of the woods yet.

STI – Updated Monthly Chart

Looking at STI from the monthly chart, it is currently resting under the 100 months moving average. As such, I would expect some level of resistance and possibly a retracement back to 150 months moving average when funds flow out of Singapore in search for yields from the tech sector in other markets.

Author’s Call as of 13th Mar 2021

• STI seems to be kept under 3100 in the past week while other markets continue to stay low until Thursday and Friday
• US 1.9 trillion rescue bill under Biden’s administration will bring about a new wave of confidence for sustainable technologies
• In the near term, investors’ attention might be shifted back to tech and tech related firms
• Optimism in the aviation sector continues to build as Min of Transport stated that leisure travel might resume in 2021 2H

Author’s Call as of 6th Mar 2021

• Rally led by STI’s 3 banks is not uniform for other major components
• STI is back at 3010 resistance level formed in Jan 2021 before the corrections
• The US 1.9 trillion rescue bill is highly anticipated and might be passed soon to boost the economy
• Vaccination efforts continues to be the bedrock of confidence for Singapore’s economic recovery