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Straits Times 3,128.88 +4.43 +0.14%
Hang Seng 26,521.85 0.00 0.00%
Dow Jones 26,787.36 -29.23 -0.11%
Shanghai Composite 3,007.88 +34.23 +1.15%
Stock Indices Continue To Power Ahead…
Corporate Digest | 20 May 2013
By: Ernest Lim
Articles (134) Profile

Asian indices continued their upwards rally, led by Japan, China and US which surged 10.5 percent, 3.5 percent and 3.3 percent respectively. (See Table 1 for the indices’ performance over the past two weeks)

Table 1: Indices’ Performances Over The Past Two Weeks

US’ S&P 500 Index (See Chart 1 below) continued its upwards ascent. As mentioned two weeks ago, S&P 500 was not overbought after surging above 1,600 and it faced no near-term resistance till 1,650. This came to a pass as S&P 500 continued to move higher and closed at another record high of 1,667.

At this level, the relative strength index (RSI) is around 72 which may be slightly overbought based on the usual levels (70: overbought; 30: oversold) but personally, in such bullish markets, a RSI of 70 may not be considered as overbought. Furthermore, it can and may stay overbought for quite some time. Meanwhile, near-term support and resistance have been raised to around 1,633 and 1,700 respectively.

Chart 1: S&P 500 Closed At Another Record High

Source: CIMB itrade complimentary chart (17 May 13)

For the Hang Seng Index chart (See Chart 2), I previously mentioned that it had developed a positive development on the chart by breaking above its downwards sloping channel since February. The chart continues to look positive with all the exponential moving averages (EMA) moving higher with 21-day EMA forming a golden cross with 50-day EMA and 100-day EMA. Near-term resistance and support are at 23,335 and 22,748 respectively. A more significant resistance is around 23,500.

Chart 2: Hang Seng Chart Forms Golden Cross

Source: CIMB itrade complimentary chart (17 May 13)

For the STI, it soared past my near-term approximate measured technical target of 3,404 to 3,427 by closing at 3,449 which was the resistance level 4 mentioned (3,450) two weeks ago.

The trend (i.e. path of least resistance) continues to be up, unless proven otherwise. Near-term resistance and support are around 3,457 and 3,421 respectively. A more meaningful resistance is around 3,480.

Chart 3: STI’s Trend Continues To Be Upwards (Unless Proven Otherwise)

Source: CIMB itrade complimentary chart (17 May 13)

1. Kreuz surged 54 percent since my writeup on 28 March 13

Kreuz Holdings has done very well since my writeup on 28 March 13 http://www.ernestlim15.blogspot.sg/2013/04/kreuz-good-results-strong-chart-low.html. There are updated analyst reports post Kreuz results on 9 May. Feel free to email me at crclk@yahoo.com.sg and I can send you the latest analyst reports.

2. Swiber rose 10 percent since my writeup on 12 April 13

After my writeup http://www.ernestlim15.blogspot.sg/2013/04/swiber-dropped-8-in-7-trading-days-any.html on 12 April, Swiber Holdings actually fell to an intraday low of $0.585 on 3 May. It subsequently reported a good set of results on 14 May and jumped 11.3 percent immediately after its results. Some analysts have subsequently raised their target prices to more than $0.86 after its results. Feel free to email me at crclk@yahoo.com.sg and I can send you the latest analyst reports.

3. Dukang jumped 50 percent since my writeup on 12 April 13

Dukang Distillers Holdings soared 50 percent since my writeup one month ago http://www.ernestlim15.blogspot.sg/2013/04/dukang-distillers-price-range-bound.html. Currently, there is still no rated analyst coverage on this stock. Nevertheless, readers who are interested to know more about Dukang can email me at crclk@yahoo.com.sg and I can send you the unrated analyst reports.

4. Tiong Seng rose 4 percent since my writeup on 3 May 13

Tiong Seng Holdings gave out a dividend of $0.01 after my writeup http://www.ernestlim15.blogspot.sg/2013/05/tiong-seng-sitting-pretty-on-s147b.html on 3 May 2013. Inclusive of that dividend, it has moved 4 percent higher since my writeup.

In a nutshell, I would continue to advocate selective stock picking (alpha over beta). Nevertheless, notwithstanding the bullish markets, we should still be aware of the potential risks involve and should not be 100 percent invested.

Please note 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 supports and resistances are:

Current: 3,449.30

Support 1: 3,421

Support 2: 3,391

Support 3: 3,366 to 3,368

Support 4: 3,341

Resistance 1: 3,457

Resistance 2: 3,466

Resistance 3: 3,480

Resistance 4: 3,494 to 3,500

*Supports and resistances are not static levels. They may be subject to changes daily.

*Summary of Economic Calendar for the week ahead (Singapore time)

21 May, Tuesday: (US) FOMC Member Bullard & FOMC Member Dudley Speak;

22 May, Wednesday: (Japan) Trade Balance / BOJ Press Conference; (UK) MPC Meeting Minutes / Retail Sales; (Europe) EU Economic Summit; (US) Existing Home Sales / Fed Chairman Bernanke Testifies / Crude Oil Inventories / FOMC Meeting Minutes;

23 May, Thursday: (China) HSBC Flash Manufacturing PMI; (UK) Second Estimate GDP q/q; (Europe) German, Europe and French Flash Manufacturing and Services PMI / Consumer Confidence / ECB President Draghi Speaks; (US) FOMC Member Bullard Speaks / Unemployment Claims / Flash Manufacturing PMI / New Home Sales;

24 May, Friday: (Japan) BOJ Gov Kuroda Speaks; (Europe) GfK German Consumer Climate / German Ifo Business Climate / German Buba President Weidmann Speaks; (US) Core Durable Goods Orders m/m / Durable Goods Orders m/m;

*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.

Please refer to Forex Factory Calendar for a more detailed / up to date list of economic events.

All the best for your investment and trading!

Information sources: Various sources such as Bloomberg, Dow Jones, Forex calendar, Zacks Investment Research, Reuters, SGX, Yahoo Finance, and Business Times etc.

P.S: The above is part of a bi-weekly newsflash which I send out to my clients on a weekend.

Disclaimer
The information contained herein is the writer’s personal opinion and is provided to you for information only and is not intended to or nor will it create/induce the creation of any binding legal relations. The information or opinions provided herein do not constitute an investment advice, an offer or solicitation to subscribe for, purchase or sell the investment product(s) mentioned herein. It does not have any regard to your specific investment objectives, financial situation and any of your particular needs. Accordingly, no warranty whatsoever is given and no liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of this information. Investments are subject to investment risks including possible loss of the principal amount invested. The value of the product and the income from them may fall as well as rise. You may wish to seek advice from an independent financial adviser before making a commitment to purchase or invest in the investment product(s) mentioned herein. In the event that you choose not to do so, you should consider whether the investment product(s) mentioned herein are suitable for you. The writer will not, in any event, be liable to you for any direct/indirect or any other damages of any kind arising from or in connection with your reliance on any information in and/or materials appended herein. The information and/or materials are provided “as is” without warranty of any kind, either express or implied. In particular, no warranty regarding accuracy or fitness for a purpose is given in connection with such information and materials.
Ernest Lim is a CFA, CA and has worked at GIC Special Investment. He has a solid feel of the markets and financial world and is now a remisier.

Please click here for more information about this author.


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