Singapore: STI Index (.STI) market plunges amid global bloodshed on virus fears

Singapore: STI Index (.STI) market plunges amid global bloodshed on virus fears

Fears that the coronavirus outbreak could turn into a worldwide pandemic sparked panicked selling across the region yesterday.

The local market was among several Asian bourses that fell by more than 3 per cent to extend a collapse in New York and Europe that has wiped trillions of dollars off valuations.

The Straits Times Index closed down 100.62 points, or 3.23 per cent, to 3,011.08 yesterday.

The bloodshed was much the same elsewhere, with Tokyo, Sydney, Seoul and Bangkok all down by more than 3 per cent.

The hardest-hit businesses are from retail and food and beverage sectors.

Singapore stocks have suffered even as the Government announced a large fiscal stimulus in its 2020 Budget.

However, the Budget was announced a day after the official economic growth estimate was downgraded by a full percentage point to a range of minus 0.5 to 1.5 per cent.

That has raised the spectre of a possible recession, with most analysts now expecting the economy to contract in the first quarter of this year. Some expect the slowdown to spill over into the second quarter as well.

“It is now clear that Covid-19 will result in a substantial hit to economic activity, with Asia ex-Japan in the firing line,” said Nomura International.

The bank said anaemic China demand, supply chain disruptions, weak tourism and reduced local services are likely to cut economic activity by at least 50 per cent in the first half.

While pent-up consumer demand in China may start to pick up in the second quarter, full-year 2020 growth estimates have still been marked down because the catch-up will be partial.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 3,182.68.

The projected upper bound is: 3,085.29.

The projected lower bound is: 2,928.81.

The projected closing price is: 3,007.05.

Candlesticks

A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 23 white candles and 24 black candles for a net of 1 black candles.

A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 8 falling windows in the last 50 candles–this makes the current falling window even more bearish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 7.3156. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 8 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 25.72. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 18 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -229.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 9 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 4 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed down -100.620 at 3,011.080. Volume was 120% above average (neutral) and Bollinger Bands were 70% wider than normal.

Open     High      Low     Close     Volume___
3,043.6703,056.5603,008.4603,011.080 552,747,328
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 3,154.38 3,208.71 3,206.84
Volatility: 20 16 13
Volume: 274,968,736 217,768,320 230,533,024

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

STRAITS TIMES gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
STRAITS TIMES is currently 6.1% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of .STI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .STI and have had this outlook for the last 23 periods. Our momentum oscillator is currently indicating that .STI is currently in an oversold condition.

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