Capitalising on Interest Rate Shifts: Promising Sectors & Assets

Thoughts on Week Ahead:

Week 18 Dec 2023

Capitalising on Interest Rate Shifts: Promising Sectors & Assets

Markets navigate divergent paths in the shadow of recent central bank announcements. While the S&P 500 finds support at 4,650 and eyes resistance at 4,800, buoyed by dovish FOMC signals, China A50 remains subdued, breaking below its 11,142 October 2022 support as worries linger around real estate restructuring.

Meanwhile, the Straits Times Index surprised with a short-term momentum shift, breaking above its down trendline. We expect the index to retest its immediate resistance at 3,175, with further potential towards 3,258. However, our long-term view remains cautious due to bearish signals from the LT Cycle model.

In light of the evolving interest rate landscape, we see opportunities in interest-rate sensitive sectors and asset classes, particularly REITs and bonds. As central banks pivots from its rate hike policy, these assets stand to benefit from increased demand for income-generating investments.

Headlines for Week Ahead:

- US 3Q23 GDP, Nov PCE

- China loan prime rate fiixng

- SG NDOX

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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