Market Weekly Outlook

Thoughts on Week Ahead:

Week 19 May 2024

“It’s Fresh!” US markets hit fresh highs this week, driven by modest CPI data and resilient earnings reports. Investors are now awaiting the FOMC minutes for clues on the future interest rate policy. Additionally, Nvidia’s upcoming earnings report is expected to shed light on the strength of the current AI-driven rally.

We initially anticipated sideways momentum in the US market indices, but the market exceeded our expectations, breaking above our range. As a result, we have revised our technical outlook to cautiously bullish, setting our next target at 5,420.

In the East, Beijing is implementing more aggressive policies following its trillion-dollar bond sale. The central government plans to buy back unsold homes and eliminate mortgage rate floors for individuals. Our team believes that even more aggressive measures may be introduced if necessary to revive the economy and stabilize falling property prices.

The Greater China indices, China A50 and HSI, are trading in line with our expectations, supported by these measures. Our targets for these indices remain at 13,500 and 20,000, respectively.

Back in the Singapore market, our analysis suggests the index could retest the 3,350 level.

While markets may consolidate slightly this week, our preference is to take long positions in the equities market, remaining vigilant for any signs of supply pressure.

Headlines for the week:

- US Corp Earnings (NVDA, TGT, PDD)

- SG Corp Earnings (Singtel)

- US FOMC minutes, PMI

- China LPR Fixing

- SG final GDP 1Q24, Apr CPI, Ind Prod, Short trading week

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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