Weekly Market Update

Thoughts on the Week Ahead:

Week of May 27, 2024

Taking a lift down from the HDB flat, enjoy a brisk walk to Sixth Avenue for Sunday breakfast. This scenario, unimaginable many candlesticks ago, is soon becoming a reality in Singapore.

This week, the spotlight is on the US PCE inflation report, which has the potential to move the market. The market expects a 0.3% uptick, a notable deceleration from March. The US earnings season is nearly over, with attention remaining on results from Costco and Dell.

In China, May's official PMI figures are anticipated to reflect a modest expansion in manufacturing, shedding light on the potential allocation of over CNY 1 trillion in stimulus from long-dated bonds.

Market technicals for the S&P 500 continue to suggest an upward trend, but we are very cautious about the market as the earnings season ends and investors re-evaluate current valuations. Our target remains at 5,400, with immediate support at 5,260.

Our trading strategy for the week ahead is to go long but selective. Note that the US market is closed on Monday.

Headlines for the week:

- US Corp Earnings (COST, DELL)

- SG Corp Earnings (SATS, Valuetronics, )

- US PCE, FED officials speak. Closed on Monday.

- China PMI

- 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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