STI 20 July - Head & Shoulder formation?

Straits Times Index has been crossing key resistance levels in my earlier posts to reach 2954 (recent high) at 23.6%. (who says it's bearish then??)

Confidence among investors has returned with Singapore posting GDP growth above expectations and good Q2 earnings for companies. Despite recent noises from US, Europe and China.

Looking forward, it has formed the right shoulder which means possible reversal unless it can cross the 3,000 mark and exceed beyond previous high of 3,300...
Neckline at around 2,800 points.

Trade with care. Pyramid trading rule applies.. i.e. buy less when the price is high.

Disclaimer applies.

DJ MARKET TALK: STI +1.0%; Gains May Be Short-Lived - Trader

Singapore shares stage broad-based advance following Wall Street's rally, with STI gapping up at open, last +1.0% at 2889.94. If benchmark able to clear 2900, next resistance expected at 2959 (May 4 high). Market breadth at 9 gainers for every decliner. "The gains are nowhere near Wall Street's. This could mean just a knee-jerk reaction and the current rise may be short-lived. Better make the most of it while it lasts," says trader at local brokerage. As expected, usual cyclical stocks among best performers for STI components, with NOL (N03.SG) +2.1% at S$1.96, Noble Group (N21.SG) +1.8% at S$1.71, SembMarine (S51.SG) +1.6% at S$3.87. Lower liners also making headway, with FTSE ST Small Cap Index +1.4%.

Spare A Minute...Property Related Counters

"PROPERTY PRICES CONTINUE skywards in Singapore and on Sentosa" has appeared in the headlines recently. As much as the recent hype on the Gulf Oil Spill that has been tormenting our Oil & Gas counters, Property counters and REITs has been 'consolidating' with low volume. Here's a report:

On Jul 1, the Urban Redevelopment Authority (URA) released the flash estimates of the property price index (PPI) for 2Q10 which indicated that property prices are above their 1996 peaks.

Citi is expecting rental and resale prices in in the mass-market segment to rise by another 5–10%, but warns that policy risk remains in this segment.

Citi is recommending the low-risk S-REITs over developers “given the increasingly unfavourable risk/reward ratio”. Among the developers, its top pick for the sector is CapitaLand for its attractive valuation and diversified portfolio followed by hold recommendations for CapitaMalls Asia and Keppel Land because of their limited exposure to Singapore residential property. Citi has sells on City Developments and Allgreen Properties which are skewed towards residential segment.

It likes the REITs most, and its favourites are Ascendas REIT, CapitaCommercial Trust, Suntec REIT and Mapletree Logistics Trust.

CIMB favours the office segment and its top pick is Keppel Land. According DTZ estimates, office rents bottomed in 2Q10 after having fallen 50–60% from the peak in 3Q08. Prime offices in Raffles Place led the turnaround in rents with a 1.3% increase quarter-on-quarter to $7.90 per sq ft per month. Cheng Siow Ying, DTZ’s Executive Director (Business Space) says in a report dated June 29: “Due to the strong economic recovery, a large number of new leases signed in the first half of the year involved companies taking up expansion space. We see broad based recovery in demand from all business sectors led by banks and financial institutions.”

STI 5 July 2010 - Consolidation ??

The STI at 2856 remains relatively resilient, in view of weakness by both the Dow and the Shanghai Composite Index. Although short-term indicators such as five-day stochastics are falling, and medium-term indicators such as quarterly momentum are lacklustre, the STI’s long-term indicators appear to be gradually strengthening, in particular, the important two-year indicator. Meanwhile, annual momentum has bounced off support and is recovering. The index is therefore unlikely to break below the May low of 2,650. InsteadIEW, it should stay within a trading range. The 50-day and 100-day moving averages are at 2,844 and 2,837 respectively. The game changer would be a convincing break above these levels, but that too is unlikely.