Singapore: STI Index (.STI) rises over news of upcoming ‘extended meeting’ between Trump and Xi

Singapore: STI Index (.STI) rises over news of upcoming ‘extended meeting’ between Trump and Xi

With news that US President Donald Trump and his Chinese counterpart Xi Jinping are set for an “extended meeting” at the G-20 summit, and dovishness from other central banks added to the mix, risk-on attitudes returned to the fore.

Buoyed by the sentiment, Singapore’s Straits Times Index (STI) closed at 3,288.17, rising 49.44 points or 1.5 per cent.

“Investors are in a euphoric state of mind as easing of US-China trade tensions, fused with the anticipation for the Federal Reserve Board to define an overtly dovish tone, have equity markets surging in Asia,” wrote Vanguard Markets managing partner Stephen Innes.

Such moods, CMC Markets analyst Margaret Yang said, “led to an extension of relief rebound in Singapore equity market, which has largely outperformed its regional peers since early June”.

It was more of the same elsewhere in the region as Australia, China, Hong Kong, Japan, Malaysia and South Korea all clocked gains.

Of the lot, Hong Kong’s Hang Seng Index fared the best, adding 703.37 points or 2.6 per cent to close at 28,202.14. Australia’s ASX 200 added 78.10 points or 1.2 per cent, extending an 11-year high.

But markets often cling to positive news, and at times, can be myopic.

The proposed meeting removes the worry that the two leaders would not meet but not whether a deal will be struck.

Market observers pointed out that a cooling of relations for the long haul may be too premature an assumption at present.

As one trader put it: “It was a good opportunity to take profit on yesterday’s rally until the political climate is clear.

“It is best to stay vigilant, especially since markets remain volatile and trade issues can always head south.”

In keeping with the risk-on mood yesterday, the Singapore market had another day of vibrant turnover on its hands.

Trading volume clocked in at 1.63 billion securities, 36 per cent over the daily average in the first five months of 2019.

Total turnover came to $1.46 billion, 40 per cent over the January-to-May daily average.

Across the market, advancers trumped decliners 293 to 140. Just a single counter – Dairy Farm International – of the STI’s 30 components closed in the red.

Financials led the way, with DBS Group Holdings finishing 63 cents or 2.5 per cent higher at $25.43, OCBC Bank gaining 23 cents or 2.1 per cent at $11.18 and United Overseas Bank finishing at $26.14, advancing 54 cents or 2.1 per cent.

DBS shares were given an additional boost following an upgrade of the bank’s stock to “buy” by OCBC Investment Research.

It said it was an opportune moment to enter positions on the stock, which has “Reit-like traits including quarterly dividend payout”.

OCBC head of research Carmen Lee maintained the fair value for DBS at $29.18.

Separately, DBS Equity Research noted in its stock pulse report yesterday that “cyclical laggards to the current rebound could attempt a catch-up in the near term”.

This includes counters like Sembcorp Industries (up five cents or 2.1 per cent to $2.44), Sembcorp Marine (up four cents or 2.7 per cent at $1.51), and Keppel Corp (up 13 cents or 2 per cent at $6.51).

While markets remained largely positive and may continue to do so after the Fed meeting, judging from recent volatility and the unpredictable nature of Mr Trump, it is probably best not to look at the future with rose-tinted glasses.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 3,355.17.

The projected lower bound is: 3,219.79.

The projected closing price is: 3,287.48.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 32 white candles and 17 black candles for a net of 15 white candles.

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 4 rising windows in the last 50 candles–this makes the current rising window even more bullish.

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 88.1597. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 17 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 67.55. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 11 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 161.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 2 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 buy 9 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed up 49.440 at 3,288.170. Volume was 22% above average (neutral) and Bollinger Bands were 6% wider than normal.

Open High Low Close Volume___
3,275.4303,289.0403,268.5603,288.170 256,051,072

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 3,209.61 3,257.27 3,177.37
Volatility: 10 13 15
Volume: 207,446,656 203,169,056 211,558,624

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 up today (bullish) 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 3.5% above its 200-period moving average and is in an upward 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 bullish on .STI and have had this outlook for the last 1 periods.

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