Yeo and Foo say that three observations from their analysis of the past 13 years show that August has been a consistently weak month — eight stocks with a combined index weight of 61% suffered an average m-o-m decline of more than 3% in August, with a negative reliability of more than 77%.
DBS Group Research analysts are expecting an August pullback for the Straits Times Index (STI), caused by profit taking of index heavy weights going ex-dividend. This is a trend they say is consistent with historical seasonal weakness seen in this month and third quarter overall.
Analysts Yeo Kee Yan and Foo Fang Boon say that STI’s near term resistance is at 3,408 with near term support of around 3,275 and 3,225. August is also typically a volatile month for the US equities, often referred to as the “dog days of summer”, coinciding with a period of lower liquidity as more investors go on holiday.
