Resilient Equity Markets, Anticipating Stimulus in China

The equities market enjoyed a surge last week, bolstered by the successful resolution of the US debt ceiling crisis. Additionally, the release of promising US jobs data and a better-than-expected report on China's manufacturing sector offered further impetus to the markets.

In the East, despite ongoing efforts to stimulate its economy following the lifting of lockdown measures, China continues to grapple with a challenging recovery process. This struggle is primarily due to an economic crackdown and weak exports. As a result, market analysts anticipate that Beijing will amplify its stimulus strategies to rekindle domestic growth.

Based on these positive signals and the prospect of increased stimulus, alongside appealing valuations, we anticipate this upward trend to persist.

JD.com (9618, HK): Expecting Trend Change. Weak supply effort observed with relative strength and fund flow improving. We expect rebound to continue towards HK$160 level, with stop loss price below HK$122.70

Our trading strategy this week will be to continue seek out opportunities for long trades in both the US and China markets.

Headlines for Week Ahead:
US Services PMI
China Trade Data
China Inflation
SG PMI

Disclaimers apply

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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