Singapore: STI Index (.STI) sentiments are showing signs of a recovery

Singapore: STI Index (.STI) sentiments are showing signs of a recovery

Local business sentiments are showing signs of a recovery after being weighed down for most of the year by an uncertain global economic outlook amid a trade war between the world’s two biggest economies.

Business confidence strengthened to +5.31 percentage points for the first quarter of 2020 from the near two-year low of +4.82 percentage points for the fourth quarter of this year, Singapore Commercial Credit Bureau (SCCB) said in its Business Optimism Index (BOI) study released on Tuesday (Dec 3).

Compared with a year ago, however, the BOI fell to +5.31 percentage points for the first quarter of 2020 from +7.19 percentage points for the first quarter of 2019.

“Despite the muted outlook among local firms for most of 2019, we expect a slight turnaround in sentiments moving into Q1 2020,” Ms Audrey Chia, SCCB’s chief executive officer, said in the release.

The services and financial sectors were the most optimistic, while the construction, wholesale and manufacturing sectors were the gloomiest. Key challenges to business include global economic uncertainties, increased competition and rising business costs.

“The services and financial sectors will remain key pillars of growth, while the manufacturing and construction sectors will see a softer outlook in the coming months,” said Ms Chia.

Of the six indicators in the index, employment, inventory levels and new orders dropped from the previous quarter, while net profits, volume of sales and selling price increased.

SCCB polled 200 business owners and senior executives representing major industry sectors across Singapore. The index figures represent the net percentage of respondents expecting higher sales and such, compared with the same quarter a year ago.

The SCCB also said that compared with 2019, firms have a mixed outlook about their investments next year. The majority, 73 per cent, expect investments to remain unchanged.

The top two most important areas of investment for 2020 are information technology, and machinery and capital equipment. In technology investments, most of the firms are expecting to invest in software and subscription-based Information and communications technology (ICT) services, followed by investments in ICT training programmes such as data analytics and cyber security and ICT infrastructure and network.

Said Ms Chia: “For 2020, firms are mixed about their investments for expansion plans compared to the previous year. The expected increase in investments is most marked within the services sector as compared to manufacturing and construction.”

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 3,228.46.

The projected lower bound is: 3,118.41.

The projected closing price is: 3,173.43.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 2 white candles and 8 black candles for a net of 6 black candles. During the past 50 bars, there have been 23 white candles and 26 black candles for a net of 3 black candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is 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 17.1536. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 7 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 41.24. 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 sell 17 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 -162.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 6 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 13 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed down -14.890 at 3,173.080. Volume was 34% above average (neutral) and Bollinger Bands were 33% narrower than normal.

Open     High      Low     Close     Volume___
3,174.9903,186.6403,160.9303,173.080 330,602,912
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 3,204.72 3,178.83 3,227.16
Volatility: 10 11 12
Volume: 415,210,656 258,855,488 227,081,552

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 is currently 1.7% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of .STI (mildly bearish). Our trend forecasting oscillators are currently bearish on .STI and have had this outlook for the last 3 periods.

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