My Market Outlook for 2019 - Straits Time Index (31 December 2018)

Today is the final trading day for the Singapore market and it is time for me to share my year-end analysis and my thoughts and opinions regarding the market outlook for the Straits Time Index (STI) in 2019 potentially.

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STI in 2018

In overall, the Singapore's benchmark index, the STI, kick-started 2018 with 3,406.48 points and moved higher to breach 3,600 level before going down in late January towards the 3,320-3,340 level. The bulls made another two attempts in March to hit 3,600 level, but failed. Finally, a fourth attempt was made in April and the bulls succeeded in breaching the 3,600 level for the second time in 2018. This was the last time price could breach 3,600 level, before the bears took over once again and drove the price down back to the 3,320-3,330 level once again, this battle between the bulls and the bears was summed up to be a consolidation trend for the first six months.

 Picture 1: Chart of STI depicting the consolidation zone in 2018, via InvestingNote.

The bears eventually pushed the price down and broke the 3,320-3,340 level. The next strong support, which is the ultimate support, would be at 3,200 level. This 3,200 level had been supporting the price above since May 2017, showing how strong the bulls were. The bulls attempted to support the price at the 3,200 level in July once again but this only lasted two months. From September 2018 onward, price broke below the 3,200 level decisively twice and although there were signs of fierce fighting between the bulls and the bears, the bears won and pushed the price further down below the psychological 3,000 level before the bulls fought back, pushed the price back up above the 3,000 level and as of today, is still fighting to stay afloat above it.

Picture 2: Chart of STI depicting the 3,200 level, via InvestingNote.


What can happen in 2019? 

Picture 3: Chart of STI, depicting the trend, via InvestingNote. 

Throughout 2018, price was basically in a trendless period before a downtrend was formed. A downtrend was formed when price made a successive lower peaks and lower troughs. Towards late December 2018, a higher low was formed and this signifies the end of the bears. However, as of today, 31 December 2018, neither the bears nor the bulls are taking charge right now.

Personally, since the bears failed to stop the bulls in making another lower low, I am slightly bullish in the Singapore market in early 2019.

Picture 4: Chart of STI weekly chart, depicting 2,950-3,000 level. 

If we look at the weekly chart, you would see that the current bearish price movement could be a possible return to the 2,950-3,000 level. This level was not back-tested ever since price broke above it just as 2017 started. MACD indicator shows a slight bullish strength, but it is still not enough in my opinion. 

Conclusion 

All in all, if you ask me which way STI will go in 2019, I don't have a precise up or down answer because we are looking at uncertainty and price is currently in a sideway mode. But, I would say do watch out for these two levels - 2,950 and 3,200. These two levels are highly critical. 

For the bulls, in order to start moving the STI up, price must break the previous high of 3,192.88 formed on 3 December 2018 (or decisively above 3,200 if you are looking for a whole number). 

Whereas for the bears, in order to start moving the STI down, price must break the previous low of 2,955.68 formed on 26 October 2018 (or decisively below 2,950 if you are looking for a whole number).

This is despite me still looking at a potential STI of 4,000 written in an article before. 

Once again, I wish you a Happy New Year!

 

Straits Times Index (3 December 2018)

In the previous article "Straits Times Index (10 September 2018)", I was very bullish in the short term and bearish in the longer term, where the Straits Times Index (STI) "shall resume its decline towards the psychological 3,000 level and probably, reaching my 2nd target of 2,800-2,840 level".

What happened?

Well unfortunately, it did not hit my 2nd target as a matter of fact. The lowest it went was 2,955.68 on 26 October 2018, before the bulls changed the direction, pushed the STI towards 3,000 and hovered around the 3,000-3,100 area.

Picture 1: STI daily chart depicting the low of 2,955.68 on 26 October 2018 via InvestingNote.

Looking at the bigger picture

Hopping on to the monthly chart of STI, it was testing the lower side of the long-term uptrend, depicted with a thick black line in picture 2. Those three circles are where price began to rebound and the line almost perfectly joint the three of them together.

Picture 2: Monthly chart of STI, via InvestingNote.

What can happen next?

STI ended with a green candle for the month ending November 2018, which is good enough to prove that the downside strength is very likely to have completed and the STI is looking to resume its bullishness towards the previous high, at about 3,600 level or even higher towards the upper trendline, in my opinion.

Conclusion

I am bullish on STI in the long term as I once said that 4,000 is a likely target for the bulls and that the current bears are just testing the lows of it (somewhere in my STI analysis articles). This upcoming long-term rally, if it happens, shall be the final leg for the bulls before the next financial crisis in my opinion.

The rally would have to reach higher than the previous high of 3,641.65 achieved on 2 May 2018 and/or even breach the long-term upper trendline for the bulls to stay consistently strong, failing which, the bears will take the control and you know what is likely to happen by then.

Straits Times Index (10 September 2018)

In the previous article, "Straits Times Index (6 August 2018)", I highlighted that the failure of the upward movement to push above 3,340-3,360 resistance could spell a disaster for the bulls. Furthermore, I disagreed that the support at 3,260-3,280 is going to hold and my 1st target is at 3,170-3,200 while my 2nd target is at 2,800-2,840.

Straits Times Index (STI) closed at 3,134.49 last Friday, on 7 September 2018. This drop was very swift and was well below my 1st target of 3,170-3,200 (3,200 as a whole number). Note the word "swift", I will be mentioning it later.

The importance of 3,200

I can't further emphasise how important this 3,200 level is. Look at the chart below and notice the shaded area.

Picture 1: Chart of STI, highlighting the importance of 3,200 level.


The shaded area depicts 3,170-3,200 support. It managed to prevent price from breaching below it for a total of 12 times. This level tells us whether the bulls are able to advance well or not. However, STI closed decisively below the 3,200 for the first time since May 2017.

A closer look at some STI counters

When I apply a simple and basic MACD indicator, look at the shaded area. both lines are pointing downwards decisively with full of bearishness.

*MACD: Blue line as the MACD line, red line as the signal line. When the blue line crosses above the signal line decisively, further bullishness is expected. Vice-versa for crossing below the signal line.

Venture

Below is the monthly chart of Venture, one component that makes up the STI.

Picture 2: Monthly chart of Venture.

DBS

Below is the monthly chart of DBS, one component that makes up the STI.

Picture 3: Monthly chart of DBS.


UOB

Below is the monthly chart of UOB, one component that makes up the STI.

Picture 4: Monthly chart of UOB.

There is a reason why I choose monthly charts - they are the maps for the longer term trends and they triumphs weekly chart, daily chart without doubt.

What is going to happen next?

You might be panicking now, hoping that the market can open right away for you to get out especially if you are holding to any STI counters. Earlier on, I did mentioned the word "swift". What is it?

Picture 5: A closer look at STI daily chart.

There is an immediate support at 3,120 and price on Friday moved up by 0.42 points despite opening at a downward gap. Never mind about that tiny little gain - a doji was formed after a sharp and decisive breakthrough below 3,170-3,200 level. This shows that the drop was too swift and could trigger a short term rebound back to the 3,170-3,200 level. That would be a "final chance" to get out for the bulls, if you want to.

Thereafter, price shall resume its decline towards the psychological 3,000 level and probably, reaching my 2nd target of 2,800-2,840 level.

Straits Times Index (6 August 2018)





On 3 August 2018, Straits Times Index (STI) rose from an open of 3,300.59 to a high of 3,311.64 before tumbling down to close at 3,265.73. It was a decrease of 20.59 points. What does the drop tells us about the price action? Simply, there was a price rejection observed above that whole number minor resistance - 3,300 level.

About two weeks ago, I have shared my analysis of STI for 23 July 2018. My view was that the STI is likely to go up and test the resistance at 3,340-3,360 region, as I observed signs of accumulation via the inverted head and shoulders pattern.

Picture 2: STI before 23 July 2018.

True enough, only on 26 July 2018, STI made a high of 3,341.42 - just barely touched the 3,340-3,360 resistance just by 1.42 points before going into a tiny consolidation. And that's it. Neither candlesticks have closed at the 3,340-3,360 area since price broke below the same area on 18 June 2018. Furthermore, only two candlesticks made a touch at the 3,340-3,360 area (19 June and 26 July).

So what's next?

Since STI failed to hit the 3,340-3,360 resistance (let alone staying above), the only way is to go down. Take a look at picture 2.

Picture 2: Chart of Straits Times Index, with support and resistance lines.

While moving up towards the 3,340-3,360 resistance, price made a constant upward momentum - which can be drawn along with a blue upsloping trendline. I talked about the failure to break above that 3,340-3,360 resistance and what happened? Price began moving down and even broke below the blue upsloping trendline on Thursday, 2 August 2018. A secondary confirmation came the next day (3 August 2018), when price continued to close below the trendline, halting further bullish strength and resuming the downtrend. This spells trouble for the bulls.

With that, I do not think that the support at 3,260-3,280 is able to withstand the selling pressure and therefore, my 1st target shall be 3,170-3,200 area (whole number support of 3,200). What's more, if 3,170-3,200 area still doesn't hold, further bearishness can slide in, giving me a target of 2,800-2,840.Yes, you saw that - below the psychological 3,000 and by the way, is a projection of the bearish flag formation (if it happens).

Maybe some might still remember one of my STI analysis where I gave a view that STI can hit 4,000 level, the next psychological level that once hit, opens up to near-unlimited jubilation and exhilaration among investors. My stand remains the same, it is likely for STI will eventually hit 4,000 but for now, it is currently testing the low. Hitting 4,000 might take months, if not years (maybe a year or so).

Straits Times Index (23 July 2018)

Analysis on STI

Without delaying, let us look at the chart of the STI. On 20 July 2018, the STI closed at 3,297.83 points. Before that, it was beaten down from a high of 3,641.65 on 2 May 2018 to a low of 3,176.26 on 6 July 2018. STI managed to find a support at 3,200 level (the lower blue-coloured area) and rebound to break and retest the next support at 3,220 level (the higher blue-coloured area).

Picture 1: STI chart depicting support and resistance levels only, via InvestingNote.

With that, STI has taken off from the 3,200 level after testing and should be looking to head over to the next resistance at the 3,340- 3,360 region (green-coloured area) when the market reopens on 23 July 2018.

Signs of Accumulation

Picture 2: STI chart depicting support and resistance levels and the accumulation points, via InvestingNote.

There were signs of accumulation as three points of accumulation had been observed by me. They are marked in circles and what it seems like is an inverted head and shoulders classical pattern. The pattern was successful as price managed to break out of the blue trendline drawn on the chart.

Straits Times Index (21 January 2018)

Straits Time Index (STI) has welcomed the year 2018, opening at 3,406.48 points on 2 January 2018. Before the start of the new year, I had posted an analysis that analyses on the Singapore market and some of its indexes within the Singapore market. I mentioned that price was converging inside the rising wedge and broke below the bottom trend line of the rising wedge. Then, it rose back with another point of uncertainty - price could be retesting the broken trend line and it must return back into the rising wedge to resume the bullish momentum.

Picture 1: STI InvestingNote chart, before the year 2018 arrived.

What is it now? 

As of 19 January 2018, STI closed at 3,550.36 points. This is an increment of about 145 points over 14 trading days. This tell us one thing - price must have followed the blue arrow and went back into the rising wedge. What has actually happened brought me an even greater astonishment.

Picture 2: STI InvestingNote chart, as of 19 January 2018.

STI has managed to return into the rising wedge and close above the upper trend line of the wedge. It went back to retest the upper trend line and last Friday, 19 January 2018, has confirmed the strong support from the trend line. In fact, those two long red and green candles formed a candlestick pattern known as a piercing pattern. 

What is that black horizontal line in picture 2? 

That wasn't supposed to be 3,549.77 - it was meant to be 3,549.85 in exact points. Why 3,549.85? Picture 3 will tell you why. 

Picture 3: Monthly InvestingNote chart of STI.

3,549.85 was the previous peak back in April 2015. This was why STI stopped rising and returned downward to retest the upper trend line of the wedge. 

What might happen to STI in the future? 

On 18 January 2018, we don't know whether the drop will bring the price back into the rising wedge once again. This was an uncertainty. On 19 January 2018, the huge gain has told us that the support is extremely strong and firm and that there is still bullishness going on. Furthermore, notice that STI has managed to close at 3,550.36. This close is above the previous peak of 3,549.85. My opinion is therefore that, Singapore market will continue to be bullish towards the all-time high of 3,906.16 points over the next few months. 

Picture 4: Monthly InvestingNote chart of  STI, depicting my projection.

This is a huge right-angled broadening & ascending triangle in this monthly chart. A breakout from the pattern would suggest a movement towards 4,500 points. Yes, 4,500 points. This breakout also coincides with price moving towards the next resistance, which is the all-time high of 3,906.16 points. From there, there might be a stall in bullishness with the retest of the upper triangular trend line before resuming towards the psychological level, 4,000 points.

Why do I think that STI will break 4,000 after reaching the all-time high? If you recall how the Dow Jones moved last year, it was near 20,000 points but shy of a few hundred points at that time. But 20,000 surely looks better that 19,999 points, no? It was the huge excitement, jubilation, exhilaration of the crowd, whatever you call it, that brought in enthusiastic demand regardless of whether it is oversold or not. Everyone were eager to witness the 20,000 of the Dow Jones. Eventually, when it broke that twenty grand, everyone celebrated that event with news pouring over everywhere throughout the world. This is the psychology of the crowd.

However, where will STI eventually stop climbing and start diving towards a major crash, still lies in uncertainty..