Thoughts on Week Ahead 6 Feb 2023: Market Outlook

S&P 500

HSI

Thoughts on Week Ahead:
Week 6 Feb 2023

Market Outlook

How strong was Friday’s US Jobs report? Strong enough to cause interest rate futures to shift by 25bps, resulting in a short term trend reversal for DXY, US 2yr Yield, and a selling in US equities market.

Outlook aligns with market expectations, US economy will continue to function until 4Q23, when the 1st interest rate cut may occur, and a potential weak stock market.

One other matric we are watching closely is momentum. For current uptrend to continue, we do not want indices to sell below 61.8% Fibonacci retracement level. Breaching this level signals market could trade sideways or may even return back to down trending environment.

Market selling may continue into the week ahead, banks should benefit from Friday’s US jobs report. Nil ideas spotted. We will be seeking out stocks with relative strength that may trend higher as the market stabilizes.

Headlines for Week Ahead:
Earnings Reporting (DIS, PYPL, SGX, Starhub)

Why US markets are concerned about Jobs report? There is a relatively high correlation between labour and inflation.

Danger sign for stock markets is when an inverting yield curve steepens, which is caused mostly by rate cuts and funds shifting to safe haven longer term bonds. Currently, it has yet to occur.

Please read Blog Disclaimers.

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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