Keeping A Close Watch on the Short End of the Curve

It is not surprise that many traders and investors watches the US Yield Curve like a Hawk. According to SeekingAlpha.com, the yield curve inverted 6 out of 9 times before the US and global stock market peaks.

There are a few causes for the yield curve inverts and one of the most prominent reason is tightening of interest rate by US FED. Its not an easy job to correctly execute the tightening of an over heating economy, and many a times, over tightening leads to economic recession in the US.

Following are 3 charts showing the present yield curve and the previous inverted yield curve happening just before the market peaks.

The current US yield curve has flatten but yet to invert, Singapore investors should keep a close eye on the short end of the yields curve (3mths, 2years and 5 years).

Wyckoff's Law of Effort

Law of Effort Wyckoff's Law of Effort states that on any single trading day (or week depending on time frame), huge volume (effort) push by participants should see huge price movement, resulting in a wide spread (long body). This is a basic principle of effort and result. However, as per Singtel's case study, we saw huge selling volume on 11 May, yet the price action only shows a narrow spread (small body). This divergence of effort and result in Wyckoff's Law of Effort principles, indicates possible exhaustion in selling or hidden buying. Thus, with a lack of weakness, Singtel should continue trading range bound for the coming days or weeks till further strength or weakness is observed. Swing Traders who trades range can consider positions at 3.70-3.72, with exit target 3.76-3.78.

DBS Group Holdings (D05): Upward Move Expectations

DBS Group Holdings (D05) Upward Move Expectations Technically, price trading above 36.58, could see DBS Group retest previous high of 38.55. Both Relative Strength and momentum indicator FFI are supportive of the move. Stop below 35.42 Disclaimers apply

Keppel DC REIT (AJBU): Expect price to trade towards S$2.00

Keppel DC REIT (AJBU) Expect price to trade towards S$2.00 We have observed a decrease in technical supply at the S$1.80 support area during recent trading sessions. Furthermore, a softer interest rate outlook could be advantageous for the Data Centre operator. Consequently, we anticipate the REIT to move towards our initial target of S$2.00, with the potential to reach S$2.20 if it breaks through resistance. Our stop level is set below S$1.72. Disclaimers Apply

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