A triangle pattern has taken form on the STI. The question is now which way will it break? 

Our preferred view is that prices would likely fall from here or from a slightly higher level (marginally above 3,187) to below 3,025 in the next leg down that could see prices retest the 2,900 or lower levels. 

Our long term view is that the STI may have seen a LT top at 3,464 and prices are now in a MT to LT bear market that could see the index fall below the 2011 low at 2,521. 

The alternative would be short term positive, where the triangle would see a breakout on the upside and climb to above 3,277. 

Moving strongly above the 200-day SMA would give this view a stronger footing while moving above 3,260 would confirm it. 

For the immediate term, expect more sideways movement with a slight bearish bias. (Read Report)

 

13 January 2014

IG Morning Brief

STI (60 MIN)

One scenario: as long as 3133 is a support, we are bullish with a target at 3188.

Alternative scenario: only the downside breakout of 3133 will invalidate our bullish scenario. In this case, a decline should shape towards 3119.



HANG SENG (60 MIN)

One scenario: as long as 23050 is not broken up, we favour a down move with 22565 and then 22460 as next targets.

Alternative scenario: a break above 23050 would invalidate our bearish scenario. The index could then rise to 23470.



DOW JONES (60 MIN)

One scenario: as long as 16400 is support, we are bullish. In this case, the upside breakout of 16590 will trigger a bullish acceleration towards 16730.

Alternative scenario: below 16400, the risk is a drop towards 16300.



NIKKEI 225 (60 MIN)

One scenario: as long as 15775 is a support, we are bullish with a target at 16315.

Alternative scenario: a break below 15775 would invalidate our bullish scenario. The index could then decline to 15590.



SINGAPORE

The Straits Times index was flat on Friday. The index is above its 20d MA (@ 3116) and below its 50d MA (@ 3150).

DBS Bank (DBS) announced that it will deploy IBM's Watson cognitive computing innovation to deliver a next-generation client experience, saying: " For a start, DBS intends to apply Watson to its wealth management business to improve the advice and experience delivered to affluent customers. Watson is a cloud-based technology that can process enormous amounts of information with the ability to understand and learn from each interaction at unprecedented speed, representing a significant shift in the ability for organizations to quickly analyze, understand and respond to vast amounts of Big Data."

Financial Services: Singapore Exchange (SGX: -0.7% to S$7.07) closed at a 3-month relative low against the Straits Times Index.

HONG KONG
The HSI index rose 0.26% or 58.92pts to 22846.25 (day range: 22932.21 - 22726.84) on Friday. The index is below its 20d MA (@ 23046) and below its 50d MA (@ 23270). 30% of the index constituents are above their 20D MA (vs 26% the previous session) and 21% of the shares are above their 50D MA (vs 19%). In China, the CSI300 index fell 0.78% or 17.37pts to 2204.85 (day range: 2224.49 - 2200.22) on Friday. The index is below its 20d MA (@ 2297) and below its 50d MA (@ 2356). 13% of the index constituents are above their 20D MA (vs 14% the previous session) and 13% of the shares are above their 50D MA (vs 15%). Appx. 42% of the stocks are 'oversold' based on the RSI14 indicator.

FOREIGN EXCHANGE
US Dollar was under pressure against most of its major counterparts on Friday. On the US economic data front, non farm payrolls rose by 74K (197K expected) in December after an upwardly revised 241K gain the previous month while the unemployment rate fell to 6.7% (7.0% expected) from 7.0%. Finally, wholesale inventories increased 0.5% MoM (+0.4% expected) in November.

The Euro was firm against its major counterparts. In Europe, French business sentiment fell to 100 in December, as expected, vs 101 in November. Industrial production was up by 1.3% in November after a 0.5% decline the month before (revised from -0.3%). Economists anticipated a 0.4% gain.

The Canadian Dollar dropped against its major counterparts. Unemployment rate jumped to 7.2% (6.9% expected) in December from 6.9% the previous month.

COMMODITIES
After the close of Wall Street, WTI Crude Future (FEB 14) was up $1.1 to $92.79. The contract was below its 20D MA (@ $98.29) and below its 50D MA (@ $96.59).

Gold was up $18.4 to $1246.3. The precious metal was above its 20D MA (@ $1217) and above its 50D MA (@ $1243).

Copper Future (MAR 14) on Comex was up 4.4c to 334.3c/lb. The contract was above its 20D MA (@ 330.62c) and above its 50D MA (@ 326.76c). In Europe, the London Metal Exchange reported its copper inventories decreased 4375 tons to 343875 tons.