An overreaction or the start of a correction?

As most experienced investors should know, the market basically acts on its own with or without a compelling reason but when there is a market correction, every news agency will link it to the more compelling trigger available. This time, the correction is triggered by the news of a new variant that is supposedly way more contagious than the delta variant. As a result, we saw almost all counters retreat with aviation and tourism stock prices falling significantly. As countries continue to open up VTLs, such a news must have come in handy for sellers to sell therefore, it might have been an overreaction. In this week’s market outlook, we will focus on the movements of the index to spot the next support level that we might be able to rely on for the coming week.

STI – Updated Daily Chart

The STI daily chart dropped below the 3200 psychological barrier before mid day and continue to fall below the resistance turned support level on Friday. At Friday’s closing, the candlestick left a short wick signalling that the selling did not persist until the end of day/week.

STI – Updated Weekly Chart

On the other hand, the weekly chart seems to be way more supportive. Based on the support line drawn a while back, the STI continues to hover above it. While we are unsure if STI will continue to retreat, we can use this support before looking at the moving averages which will be around 3080 to 3100.

Author’s Call as of 27th November 2021

• Depending on the developments of the new variant, we should be able to predict if there is further downside
• The daily chart show that the index is not entirely pessimistic at market close on Friday
• The support line at around 3120 appears to be the next defence before the index approaches the 50 and 200 weekly’s MA
• Investors should have started buying back during the dip for significant discounts especially from hard hit sectors otherwise, there might be opportunities ahead if the news from the virus become increasingly severe

Author’s Call as of 21st November 2021

• Investors are having a hard time pricing Signapore stocks because potential yields seem to be too thin and company performance are not as remarkable as expected
• The daily chart show that the STI is still undecided on going up or retreating in the past week (great for short term trades)
• The weekly chart shows that STI is still bound between the two support and resistance levels and will attempt to test them soon
• Investors should look at their Singapore stocks (if any) and decide if those stocks have sufficient potential for a further climb based on the slow recovery around the world (Ex US, Japan and EU, because their growth are mostly due to QE measures)