Singapore: STI Index (.STI) huge losses as traders anticipated more flare-ups

Singapore: STI Index (.STI) huge losses as traders anticipated more flare-ups

Singapore: STI Index (.STI) huge losses as traders anticipated more flare-ups

Asian equities had no time to catch their breath on Monday, falling end over end in huge losses as traders anticipated more flare-ups from Washington after China’s yuan slumped to a decade low and stoked fears of rising trade-war pains and the spectre of a currency war.

Investors ditched stocks and dashed instead to the safe-haven trio – gold, Japanese yen and treasuries – as chances of a quick fix to the US-China trade war faded away.

Growing trade animosity between Japan and South Korea and worsening civil tensions in Hong Kong added to the mix of fear factors.

ies had no time to catch their breath on Monday, falling end over end in huge losses as traders anticipated more flare-ups from Washington after China’s yuan slumped to a decade low and stoked fears of rising trade-war pains and the spectre of a currency war.

Investors ditched stocks and dashed instead to the safe-haven trio – gold, Japanese yen and treasuries – as chances of a quick fix to the US-China trade war faded away.

Growing trade animosity between Japan and South Korea and worsening civil tensions in Hong Kong added to the mix of fear factors.

The latest development in China follows last week’s curve ball pitched by no less than Mr Trump, who then declared that the US would slap more tariffs on Chinese goods from September; he also threatened to raise the tariffs further if trade talks stall.

Morgan Stanley said: “Trade tensions have pushed corporate confidence and global growth to multi-year lows. Tariffs announced on Aug 1 raise downside risks significantly. If US lifts tariffs on all imports from China to 25 per cent for four to six months and China takes countermeasures, we believe we would see the global economy entering recession in three quarters’ time.”

Amid the risks of slowing global growth and prolonged trade tensions, major central banks, in particular the US Federal Reserve and the European Central Bank, have shifted into easing mode. But while these measures are helpful in cushioning the downside risks, there are concerns that they may not be enough to trigger a recovery – that is, until the dark clouds of trade woes dissipate.

Citi Global Research said: “The current shock to the global economy from tariffs warrants additional policy insurance. Monetary policy cannot offset tariffs and it also risks more (and excessive) appreciation of risky financial assets”.

Technical Indicators

Overall, the bias in prices is: Downwards.

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

The projected upper bound is: 3,234.66.

The projected lower bound is: 3,106.49.

The projected closing price is: 3,170.57.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 32 white candles and 17 black candles for a net of 15 white 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 5 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern 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 6.2314. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 11 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 23.30. 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 sell 21 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 -207.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 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 20 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed down -24.040 at 3,170.470. Volume was 24% above average (neutral) and Bollinger Bands were 26% wider than normal.

Open     High      Low     Close     Volume___
3,160.2603,176.6603,144.8003,170.470 263,062,800
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 3,302.90 3,285.29 3,206.91
Volatility: 13 12 14
Volume: 230,979,024 210,143,280 210,252,000

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 1.1% 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 5 periods. Our momentum oscillator is currently indicating that .STI is currently in an oversold condition.

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