Two weeks ago, I mentioned that selective stocks may have small near term technical rebound. China Everbright, Resources Prima and Sino Grandness which I highlighted under the “chart alert”, have soared 6.3 percent, 48.2 percent and 20.8 percent respectively over the past two weeks.
This can be compared favourably against the 1.2 percent and 2.4 perecnt for the STI and FSTS over the same period. Before I go through their charts, here are the technical analyses on the S&P500, Hang Seng, STI and FTSE ST Small Cap charts.
Technical Charts’ Outlook
S&P500 Index
Two weeks ago (20 Mar), I mentioned that S&P500’s medium term trend continued to be up as depicted by its rising 100-Day and 200-Day exponential moving averages (EMAs).
However, I noted that with its low ADX of 19.3 on 20 Mar, which was basically unchanged from the 19.9 seen on 6 Mar, there might not be enough impetus to have a strong upward push towards the eventual measured technical target of 2,198, should it break above 2,119.
On 23 Mar, S&P500 pushed towards a high of 2,115 before profit taking set in and it closed at 2,067 last Thursday.
Based on Chart 1 below, S&P500’s medium term trend continues to be up as depicted by its rising 100D and 200D EMAs.
However, it is noteworthy that 21-day and 50-day EMA seemed to be trending downwards. The near term chart pattern does not seem positive as S&P500 is close to its lower band of its trading range of 2,040 – 2,119.
A sustained break below 2,040 points to an eventual measured technical target of 1,961.
Near term supports are around 2,052 / 2,040. Resistances are at 2,071 – 2,076 / 2,090.
Chart 1: S&P500 traded near to its lower band of its trading range of 2,040 – 2,119
Source: CIMB itrade complimentary chart (2 Apr 15)
Hang Seng Index
Two weeks ago (20 Mar), I wrote that Hang Seng seemed to be recovering from its recent drop from around 25,000 in late Feb.
I also mentioned that it might not have the near term strength to breach its recent multi times tested resistance of 25,000 – 25,100 and is likely to trade within the range of 23,825 – 25,000.
Hang Seng traded to a low of 24,295 on 24 Mar and it managed to breach 25,100 on Thurs with a gap to close at 25,276 (last trading day of the week.)
Based on Chart 2 below, it is premature to say affirmatively that Hang Seng has managed to breach its multi times tested resistance of 25,000 – 25,100 as it only breached it last Thursday.
It will be good to monitor over the next few trading days to observe whether there is any fierce selling around this level and whether the gap seen on 2 Apr is a continuation gap or exhaustion gap.
Nevertheless, it is a good sign that Hang Seng’s 21-day and 50-day EMA have drawn apart and risen. Hang Seng’s RSI closed at 71.2, the highest level since Aug 2014.
The eventual measured technical target of 26,100 (as mentioned on my 23 Jan writeup) remains valid should it have a sustained upside break above 25,100.
Near term supports and resistances are at 25,000 / 24,700 and 25,363 / 25,500 respectively.
Chart 2: Hang Seng closed above its multi times tested resistance of 25,000 – 25,100
Source: CIMB itrade complimentary chart (2 Apr 15)
Straits Times Index
Two weeks ago (20 Mar), I pointed out that against the backdrop of a medium term uptrend, STI might continue to be range bound 3,360 – 3,460 in the next two weeks.
Since 20 Mar, STI traded to an intraday low of 3,405 on 25 Mar and to an intraday high of 3,469 on 31 Mar.
However, profit taking soon sets in at 3,469 level and pushed the STI lower to close at 3,447 on 31 Mar. It closed at 3,454 on last Thursday, 2 Apr.
Based on Chart 3 below, 21D EMA and 50D EMA have pulled apart after moving closer to each other. In another positive sign, ADX has strengthened from 16.2 on 20 Mar to 20.7 on last Thursday.
Coupled with positive signals from indicators such as RSI and MACD, it is likely that STI may be able to breach the resistance at around 3,459.
Eventual measured technical target is around 3,560 should there be a sustained breakout above 3,459. The positive chart backdrop is negated if STI falls below 3,359.
See more information on STI supports and resistances below.
Chart 3: STI – consolidates around the resistance area of 3,459
Source: CIMB itrade complimentary chart (2 Apr 15)
*FTSE ST Small Cap Index (“FSTS”)
Two weeks ago (20 Mar), I wrote that RSI fell to a five month low of 17.8 on 19 Mar before rebounding. In the near term, FSTS might move higher but is likely to face stiff resistance at 480 & 491 – 493.
With reference to Chart 4, FSTS indeed staged a technical rebound in line with my expectations. It moved to an intraday high of 487 before weakening to close at 485 last Thursday.
21-day EMA has started to turn upwards. Although the medium term trend continues to be bearish as illustrated by the break below the important support of 491; downwards trending EMAs and death crosses on the EMAs, it is likely that FSTS should head towards the key resistance level of 488 – 493 after consolidation. (See Chart 4) Supports are at 483 / 479 – 481.
Resistances are at 488 – 489 / 493.
*I am still exploring the usefulness of analysing FSTS and whether it reflects actual trading opportunities or market sentiment.
Chart 4: FSTS’ staged a technical rebound in line with expectations
Source: CIMB itrade complimentary chart (2 Apr 15)
U.S. Market Outlook
U.S. 1Q earnings commences next week with Aloca which reports results on 8 Apr, Wednesday after market. Personally, I am more positive on the Asian markets and not the U.S. on a relative basis.
For the U.S. market, firstly, I am wary of the upcoming 1Q results. With reference to Chart 5 below, this quarter has the largest downward revision to 1QFY15F earnings.
The abysmal drop in the oil price, the weak global economic growth, the strength of the USD dollar are some of the factors which may have an adverse impact to the 1QFY15F results.
Even for the oil sector, it is likely that some oil companies may be affected to a larger extent than market expectations.
Secondly, the CAPE ratio (i.e. Cyclically Adjusted Price-to-Earnings ratio which is the ratio of the S&P 500 index to trailing 10-year average earnings) is around 28, near to levels last seen in 2007.
To some market watchers such as Robert Shiller, it indicates that stocks are overvalued. This does not mean that stocks will definitely fall in the near term but it does warrant some caution in portfolio allocation.
Besides the above factors, attention is likely to be spent on parsing through the economic data to be released in the next couple of months so as to get some hints on when the Fed will start to raise interest rates.
Chart 5: Magnitude of 1QFY15F Revisions outside of the Energy Sector
Zacks Investment Research Inc.
Singapore Market Outlook
Two weeks ago (20 Mar), I mentioned that selective stocks may see some potential rebound. I have taken profit on most of the stocks and have cut loss in some so as to rebalance my portfolio.
After the trades, I have a net reduction in my equity exposure from 71 percent to 59 percent invested. Depending on opportunities, I am looking to increase my equity allocation to around 90 – 100 percent.
Below are the chart analyses on the previously mentioned China Everbright, Sino Grandness and Resources Prima Group.
I have also included Trek International and United Engineer. Do note that they are shown on the basis of technical charts and readers are advised to do their own research on the fundamental aspects.
Chart alert 1: China Everbright jumped 6.3 percent
Two weeks ago (20 Mar), I wrote the following “China Everbright seems to have formed a bullish hammer on 18 Mar. On 19 Mar, it closed +0.02 to $0.885 on higher than average volume.
On 20 Mar, China Everbright managed to close at $0.880, way off the low of $0.845 on high volumes. This was a potential reversal sign (i.e. bullish)”. This was indeed the case as China Everbright jumped 6.3 percent to close at $0.935 on last Thursday.
Based on Chart 6 below, China Everbright seemed to be on the verge of forming an inverse head and shoulder pattern.
An inverse head and shoulder is confirmed if it can make a sustained break above $0.955 – 0.980 with volume expansion.
An eventual measured technical target is around $1.08 should the inverse head and shoulder be confirmed.
It is noteworthy that the potentially bullish chart formation may be negated if it falls below $0.900 on a sustained basis with volume expansion.
Near term supports and resistances are $0.920 – 0.925 / $0.900 and $0.955 – 0.980 / $1.000 – 1.005.
Chart 6: China Everbright may be on the verge of an inverse head and shoulder formation
Source: CIMB itrade complimentary chart (2 Apr 15)
Chart alert 2: Resources Prima – completed its base formation
Two weeks ago (20 Mar), I wrote that Resources Prima’s (“RPG”) chart looks interesting amid indicators such as MACD and RSI which have exhibited bullish divergences and both indicators seemed to be strengthening. RPG started to climb on 26 Mar and surged 48 percent to close at $0.123 on last Thurs. The base formation seemed to have been completed and volumes have been picking up alongside with its ascent.
RPG’s RSI closed at 71.1 last Thursday. It is noteworthy that there were several occasions where its RSI was above 74. Its all time high RSI was 94.6 on Apr 2012.
Thus, to put it in perspective, its RSI at 71.1 is not extremely overbought yet. 21D EMA has halted its decline and inching upwards. 50D EMA seems to be tapering and may start to move higher.
In a nutshell, the chart looks positive but traders have to be nimble especially with RPG’s recent meteoric rise and its inherent price volatility. (See Chart 7 below)
Near term supports and resistances are $0.122 / $0.112 and $0.132 – 0.134 / $0.140 – 0.144.
I have also written a writeup on RPG posted on 30 Mar when it was around S$0.103. Readers can consider taking a look at http://www.sharesinv.com/articles/2015/04/01/resources-prima0fy16f/
Chart 7: Resources Prima – meteoric 48 percent rise since 20 Mar
Source: CIMB itrade complimentary chart (2 Apr 15)
Chart alert 3: Sino Grandness did well over the past two weeks
Two weeks ago (20 Mar), I cited strengthening indicators such as RSI and MFI on Sino Grandness and that it seemed to be building a base. Sino Grandness has also appreciated 20.8 percent over the past two weeks to close at $0.320 on last Thurs.
Sino Grandness’ 21D EMA has halted its decline and started to move higher. Near term supports and resistances are $0.305 / $0.285 – 0.295 and $0.350 – 0.355 / $0.370 – 0.415. (See Chart 8 below)
Chart 8: Sino Grandness jumped 20.8 percent over the past two weeks
Source: CIMB itrade complimentary chart (2 Apr 15)
Chart alert 4: Trek 2000 Int’l range bound
With reference to Chart 9 below, Trek 2000 Int’l has been trading between $0.310 – $0.375 since 19 Dec 2014.
Indicators such as MACD has staged a bullish crossover. However, its 21-day, 50-day and 100-day EMAs have trended downwards since late 2014 and have converged near to one another.
A successful breakout above $0.375 or breakdown below $0.310 points to an eventual measured technical target of S$0.440 or $0.245.
Chart 9: Trek 2000 Int’l range bound $0.310 – $0.375 since 19 Dec 2014
Source: CIMB itrade complimentary chart (2 Apr 15)
Chart alert 5: United Engineer fell 16.7 percent since 12 Feb 2015
United Engineer has dropped 16.7 percent since the intraday high of $3.29 on 12 Feb. The sharp drop was mainly attributed to the announcement that the talks between OCBC and beer tycoon Charoen Sirivadhanabhakdi have lapsed.
Based on Chart 10 below, United Engineer seems to be in the process of building a base. 21-day EMA seems to be halting its decline.
Indicators such as MACD and RSI look positive and they are strengthening. Supports and resistances are at $2.70 – 2.71 / $2.66 & $2.80 – 2.82 / 2.84 – 2.87 respectively.
Chart 10: United Engineers has dropped 16.7 percent since 12 Feb 2015
Source: CIMB itrade complimentary chart (2 Apr 15)
Please note that I am putting my equity allocation and selected stocks above just for general discussion purpose. Due to my work nature, I can change my equity allocation and the stocks quickly and without prior notice. Furthermore, I exercise an active approach in portfolio management with a relatively short horizon. Everybody is different in terms of returns expectations, risk profile, portfolio size, commitments, market outlook, stock preference etc. As such, everybody’s allocation in equities differs.
In addition, it is noteworthy that the above is my personal opinion and may not cater to your specific risk profile etc. The question of when to buy / sell and what to buy / sell differs greatly from individual to individual. Furthermore, it is extremely important to bear in mind that the market outlook is never static. It can change suddenly if there are sudden big events unfolding from the market – some events can happen as quickly as a few hours.
STI near term supports and resistances are:
Current: 3,454
Support 1: 3,432 – 3,434
Support 2: 3,421
Support 3: 3,402
Support 4: 3,372
Resistance 1: 3,459
Resistance 2: 3,465
Resistance 3: 3,483
Resistance 4: 3,492 – 3,500
P.S: Supports and resistances are not static levels. They may be subject to change daily.
**Summary of Economic Calendar for the Week ahead (SIN time)
6 Apr, Mon: (USD) FOMC Member Dudley Speaks / ISM Non-Manufacturing PMI;
7 Apr, Tues: (GBP) Services PMI; (USD) JOLTS Job Openings;
8 Apr, Wed: (JPY) Monetary Policy Statement / BOJ Press Conference; (USD) FOMC Member Dudley Speaks / Crude Oil Inventories / FOMC Meeting Minutes;
9 Apr, Thurs: ***(CNY) New Loans / M2 Money Supply; (GBP) BOE Meeting; (USD) Unemployment Claims;
10 Apr, Fri: (CNY) CPI y/y / PPI y/y; (GBP) Manufacturing Production m/m; (USD) FOMC Member Lacker Speaks;
**All economic data especially China data (if any) are subject to changes without notice. The above list is not exhaustive. I have merely listed the economic data which I feel has more impact to the market.
***(CNY) New Loans / M2 Money Supply are tentatively scheduled for released between 9 – 13 Apr 2015.
→Please refer to Forex Factory Calendar for a more detailed / up to date list of economic events.
Information sources: Various sources such as Bloomberg, Daily FX, Dow Jones, Forex calendar, Zacks Investment Research, Reuters, SGX, Yahoo Finance, and Business Times etc.