Weekly Market Outlook

Thoughts on the Week Ahead:
Week of July 15, 2024

Following the release of the CPI data, the market now prices a 90.30% chance of a 25 basis point (bps) rate cut at the US FOMC meeting on Sept 18th. We have also observed a market rotation towards disinflationary trades.

Here are some interest rate-sensitive asset classes, sectors, and markets that moved higher after the CPI report:
• Bonds (e.g., TLT, ZROZ)
• US Growth/Small Cap (e.g., IWM)
• Global REITs (e.g., SCHH, CFA)
• Utilities Sector (e.g., XLU)
• China and Hang Seng Indices (short-selling curbs also contributed to their rise)

A Note on PPI
It is important to note that Friday's US Producer Price Index (PPI) report did not decline in line with CPI. PPI is a leading indicator of US inflation.

Short-Term Tactical for the Week Ahead
Given the mixed signals, our strategy for the coming week will be cautious and selective for the US and Singapore markets. We favour the Hong Kong market.

In the Longer Term
A fall in inflation could also mean weakness in the economy. Thus, despite our continued long and bullish stance on the US economy, we are constantly monitoring for changes in market momentum or any market-altering news or events.

Headlines for the week:
- US Corp Earnings (GS, BAC, MS, J&J, NFLX, and AXP)
- US Jerome Powell Interview, Retail Sales
- China Third Plenum Meeting, 2Q24 GDP, MLF Rate
- SG Jun NODX

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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