Expect some selling in the coming week as Biden takes office

STI has been on the rise steadily due to Singapore’s control over the virus so far and the resurrection of the domestic market. That said, we are still expecting some level of volatility in the near term now that there is a change in the US president. Our Straits Times Index has also timed itself well to climb until the supposed upper limit of the parallel channel. In the coming week, Biden will be raising his new build-back-better plan to Congress. Hence, there will be another round of debates and voting before it can come to fruition. In the meantime, investors will likely anticipate an increase in corporate tax for US firms and that could very well lead to a wave of selling as investors quickly take profit since last Friday. Since STI has also just hit 3000, it might be a good time to take profit and allow the market to retrace before the next wave of buying starts after the bill has been approved.

STI – Updated Daily Chart

IT is definitely good news now that STI has gone back above 3000 however exercise caution in the coming week as there might be some level of pullback. Otherwise, there will be more or less no movement in the coming week and I do not expect a huge climb in the coming week.

STI – Updated Monthly Chart

STI has so far climbed up convincingly above the 20 Month’s Moving Average and is heading towards the uptrend resistance line before 50 Months MA. On the MACD and RSI, STI is still nowhere near overbought territory, which suggests that there is still room to climb in the longer term.

Author’s Call as of 16th Jan 2021

• STI finally went above 3000 in anticipation of further recovery in the new year
• Expect some pullback or continued consolidation in the near term
• Biden’s first policy shock to the market might be to raise taxes for corporates
• Singapore also expects a slow recovery in the coming months but with vaccination going on, the virus situation is tamed

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