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Interest shifts towards conglomerates as STI stays in corrective mode

The Edge Singapore
The Edge Singapore 4/23/2021 9:23 PM GMT+08  • 2 min read
Interest shifts towards conglomerates as STI stays in corrective mode
Interest shifts back to conglomerates such as Keppel Corp and Sembcorp Industries as STI continues to consolidate
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Week-on-week, the Straits Times Index lost a mere six points. But this calm belies a one-day 37-point drop on April 21, followed by a rebound on April 22. Technically, the STI’s quarterly momentum is struggling and the tussle could be resolved on the downside. In addition, short term stochastics and 21-day RSI are falling. In the immediate term, the STI may continue to stay within the 3,150-3,220 range. However, the uptrend may not resume in the next five trading sessions (end-April) as has been previously mentioned. If the index breaks below 3,150, the consolidation may linger on for a “sell in May and go away” theme. The original break above the narrow 3,071 to 3,118 range in the week of Mar 15-19 still remains valid as does the upside of 3,368 to 3,377 but this may take a longer time frame to achieve.

Rotational interest has moved from property-related stocks to a couple of conglomerates. Keppel Corp rebounded off the confluence of its 50- and 100-day moving averages at $5.25 in the week of Apr 19-23. Resistance/ breakout is at the twice tested $5.50 level. Quarterly momentum is a trifle weak currently, but could turn up if prices are able to move above $5.50. The 2021 high was $5.73 on a closing basis.

Sembcorp Industries has been on a steady uptrend since the end of the Circuit Breaker in June/July 2020. There was a period when it was rangebound, from the start of the year to April 1, following which prices have resumed their steady but gradual upclimb. In the immediate term, the stock could be forming a bull flag. For this to develop, prices should not fall below $2.11, and should break above $2.21 in the next three sessions.

Sembcorp Marine is taking a breather after sharp gains in early April. The 50-, 100- and 200-day moving averages are turning up simultaneously, which is a positive signal. In addition, annual and two year momentum indicators are turning up from oversold lows. If their upturn persists, prices should be able to challenge the twice tested 21 cents level to test 27 cents, a target indicated when the counter broke above 15.5 cents.

Elsewhere, property-related stocks could consolidate following recent sharp gains.

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