STI likely hover around 3000 for the time being

Biden’s administration main focus are on fighting the pandemic, restoring balance to society and environment. This probably will have more or less little impact on STI in the immediate future. However, Biden’s style of governance will also lead to global stability that will promote economic recovery in the coming year. Moving forward, countries will progressively announce measures to vaccinate more of their citizens and also announce their plans and budget for the coming year. If employment numbers continue to improve and new number of infections start to go down, I am sure the STI’s main cyclical counters will start to climb aggressively. As for the aviation and tourism industry, vaccination efforts and their liquidity continues to be the main concern for the sectors recovery. Although the current consensus from government and analysts is that the sector will take around 1 to 1.5 years to fully recover.

STI – Updated Daily Chart

STI’s reaction to the recent news is minimal however Friday’s retracement seems to be a rebound after STI closed above both resistance lines marked on the chart. On the SING futures, the chart also showed that SING dropped below its consolidation zone but is seemingly trying to stay above the lowest point after the massive climb 7 and 8 January 2021.

STI – Updated Weekly Chart

The weekly chart suggests that currently the STI is in a overbought territory hence a push back is likely. Although the extent of the pull back might still be unknown as the market might be eager to climb a little further before the next correction which many analysts are expecting. Depending on how much funds have been employed, you can determine how much more capital will you be willing to withdraw or employ in the coming weeks after factoring the impacts of an impending correction.

Author’s Call as of 23rd Jan 2021

• The STI is is weighted heavily on cyclicals hence it will continue to consolidate before the start of FY 21 in April.
• Minor retracement occurring after hitting 2 resistance lines on the daily chart
• Weekly chart RSI has also reached overbought territory hence the pull back
• It will be prudent to start adjusting your portfolios to prepare for a correction which is likely in the coming weeks or months

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