Shares of Sembcorp Marine (SCMN.SI) rose as much as 3% after brokers cited an industry publication as saying the Singapore rig builder had won an order for a drillship from a Brazilian firm.

A spokeswoman from Sembcorp Marine declined to comment on market speculation.

By 10:48 a.m. on Wednesday, Sembcorp Marine shares were 2.5% higher at $4.87 with 2.6 million shares traded versus full-day average daily volume of 7.5 million.

 

Goldman Sachs and Nomura said Sembcorp Marine had received an order for a drillship from Sete Brasil S.A., citing a report from oil and gas publication Upstream. Nomura said it believes the contract could be worth nearly US$800 million ($1.01 billion).

 

Sembcorp Marine shares rose to their highest since August, up nearly 28% so far this year.

 

The contract win from Sete Brasil will have a positive impact on Sembcorp Marine’s share price, Goldman said in a report.  

Sembcorp Marine is due to report quarterly results on Feb 20.

 

Sete Brasil is a firm created by a group of Brazilian banksand funds to build deep-water rigs for state-run oil company Petrobras’ offshore exploration campaign.

In the past week, the Straits Times Index has broken above both its 50- and 100-day moving averages at the 2,723-to-2,736 range. This is a positive and follows on from the upside break made by the Dow Jones Industrial Average and Standard & Poor’s 500 indicated earlier in the year. Several index heavyweights — Keppel Corp, Sembcorp Marine, Sembcorp Industries and Neptune Orient Lines — had also moved out of reversals including the reverse-headand- shoulders formation. The Jardine group has maintained its uptrends — all these components have sent the index higher.

 

A local broker has pointed out that Singapore Press Holdings, Sembcorp Marine and Keppel Corp have strong cash reserves that have helped to sustain generous dividend payouts. SPH has $434 million in cash, and a further $878 million in short- and long-term investments as at Nov 30, Keppel Corp has $2.66 billion and Sembcorp Marine $1.86 billion as at Sept 30. Recall that Keppel Corp and Sembcorp Marine are in uptrends after breaking out of large multi-month reverse-head-andshoulders formations. SPH is very much entrenched within a trading range. Even during its strong trending phases, the counter moves up and down by 30 cents, and the current period is not a strong trending phase.

The fear index as represented by the VIX (20) is on the wane. It eased last week, losing yet another point. The 50- and 100-day moving averages made a dead cross during the week. Directional indicators point to a downtrend, with rising ADX and negatively placed DIs. A break below 21 indicates a downside of 17.

 

There was little change over the week in the upward direction of the US markets. The Dow’s (12,449) technical outlook continues to be one of resilience. The index sustained its move above all its moving averages, following the golden cross by the 100- and 200-day moving averages at 11,963. The break at the start of the year above 12,200 indicates a target of 13,200, and should be attained soon. Rising ADX and positively placed DIs suggest that the target is achievable.

 

The S& P 500 (1,308) is rising, following an upside break above the several-times-tested resistance at the 1,264-to-1,270 level and its flat 200-day moving average at 1,257 in the second week of January. There is no change in outlook, as the target from breakout of 1,400 remains valid for now. Since ADX is rising, and the DIs are positively placed, depicting an uptrend, the target is attainable. 

 

Long term: down medium term:

up short term: peaking

 

RSI (Chart B) is rising.

ADX (Chart B) has turned up and the DIs are positively placed.

Stochastics (Chart B) is at the top of its range.

 

Quarterly momentum (Chart A) has broken  above resistance and its equilibrium line and is rising.

 

Annual momentum (Chart C) is falling.

24-month ROC (Chart C) continues to trend lower.

 

The STI’s break above the 50- and 200-day moving averages at 2,723 and 2,736 is a positive move, and follows on from the break above its equilibrium line by quarterly momentum in the second week of January. Both moves are bullish in nature and reinforce each other. Twenty-one-day RSI is also rising, an additional underpinning for the market.

 

The short-term overbought oversold indicator, 5-day stochastics is stuck at the top end of its range, and this is probably bullish rather than bearish as it marks a turn in sentiment for the market. Note too that ADX has turned up and has moved from a low of 11 to 16 currently. The DIs are positively placed. This indicator has also moved in favour of an uptrend for the STI.

 

With resistance at 2,800 just about breached, the next level of supply appears at 2,900 and the declining 200-day moving average mark at 2,912. On the downside, the levels to watch are, of course, 2,800. If this breaks down, then it is not good. Next, the potential meeting points of the flattened 50- and 100-day moving averages at 2,723 and 2,736, respectively, are supports. Recall that the Nov 25 low is at 2,643, and the Oct 4 low at 2,531.

 

Annual momentum continues to decline. The 104-week ROC paused briefly at its equilibrium line, but has now fallen below it. This is a negative signal. The opposing directions of short-, medium- and long-term indicators could keep the index below 2,900.