Monday, January 21, 2013

Weekly Update - STI to Charge Further?

Current Weekly Market Theme:
Market euphoria over partial resolution of the fiscal cliff is on the wane and the market has been looking for new catalysts to spur another round of rally. 
The debt ceiling is looming around the corner and due for another round of political 'negotiations' by end Feb - expect more market volatility and jittery. Nonetheless, the debt ceiling has been raised countless times before and going by the remarkable standards US politicians set for themselves (and their political paths), we should see yet another kick-the-can-down-the-road situation unfold. Nothing new.
Anything related to China's growth is still hot and up-and-coming. China's GDP was a tad above analyst estimates with the census department announcing an official 7.8%. While still higher than expectations, the dampener is the reluctant acceptance that China's growth will not be returning to the stunning levels we have seen in the last decade any time soon. 


STI Index goes from strength to strength; to Charge Further?
The STI has always been a huge beneficiary when China recovers given the large Chinese market links that the 30 component stocks have such as Capitaland, CapitaMalls Asia, Wilmar and Genting. The STI is also Oil & Gas heavy owing to Keppel Corp, Semb Corp, Semb Marine and Noble Group. These two sectors have been winners in the recent rally given a better-than-expected China and emerging markets recovery, bringing the STI to almost a 3 year high.
Taking a break this week, and owing to jittery fears about the looming debt ceiling, the unresolved debt crisis still ongoing in Europe, the STI took a breather with much profit-taking occuring this week. The big question is if the STI will continue to charge up further or see a near-term decline to even lower levels.
  • Challenged 3190 key support levels in this week to close at 3211 on Friday. 
  • MACD - positive divergence albeit declining. MACD still upwards trending but may seem to peak given the current run.
  • RSI (25w) - exhibiting a seeming turning point.
  • Level to watch - 3190 key support line. The STI is well perched on 3190 having tested the support this week by rallying to close on the support line despite dipping to 3160 in mid-week. Continue resting here will provide traders with confidence with the STI's rally strength and future upside may be more likely. If this support level is breached, the STI may seek a tumble down to 3080 levels.


1 comment:

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