Week Ahead: Are we in the ASML weak outlook or TSMC AI boom reality? Either way we are bullish and cautious

Week Ahead, 19 Oct 2024

Are we in ASML's weak outlook reality or TSMC's AI boom outlook reality? Either way, we remain bullish yet cautious on the markets, as indices hit fresh highs and market sentiment becomes overly optimistic. We continue to monitor signs of market demand and supply to guide our medium-term outlook.

Macro News:

- US DJIA, S&P 500, Gold, and Germany's DAX all closed at record highs on Friday.

- China's central bank chief signals the possibility of further interest rate cuts.

Market Trends:

1. Long Term:

- The trend for both the S&P 500 and the Hang Seng Index (HSI) remains upward.

- The Straits Times Index (STI) shows a neutral to upward trend.

2. Medium Term:

- The S&P 500 is nearing our 5,900 technical target level. We remain cautious and are monitoring directional movements.

- The STI is moving higher toward the 3,700 technical target level, with immediate support at 3,500.

- The HSI is at its first support level, 20,600 (Fibonacci 38.2%).

3. Tactical Ideas:

- SBUX (US)

- AAC Tech (HK)

Headlines Next Week:

- US Corp Earnings (Tesla, IBM, Boeing, Hiton, LVS)

- SG Corp Earnings (Keppel, Capland Ascendas REIT)

- US Sept PMI, World Bank-IMF Annual Meeting

- China s LPR fixing

- SG Sept CPI

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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