After losing 145 points week-on-week during May 10–15, the Straits Times Index (STI) on May 17 managed to bounce off an intra-day low of 3,027 and its 100-day moving average. The 100-day moving average at 3,040 and a support area at 3,050 were sufficient to provide the STI with enough cushion to withstand the fall. With stochastics at the low end of its range and 21-day RSI and quarterly momentum both wanting to rebound, the downside for the index is likely to be limited. On the other hand, with ADX at an ebb and the DIs still negatively placed, the rebound is likely to be capped at 3,150, a level that was once a support.
There has been little change in the chart pattern since May 15. It shows that the STI broke below a thrice-tested support at 3,150 and its 50-day moving average at 3,140. The chart pattern also indicates that prices formed a minor top, and the downside from the break, which took place on May 12, is 3,040, a level which was whipsawed on May 17. With downside limited and upside capped, investors and traders alike may have to gird themselves for a boring rest of this month.
A sustained recovery by the index is unlikely and it may only materialise during the northern hemisphere’s summer months when there is sometimes a traditional summer rally.
The banks played a large part in the STI’s resilience. Among them DBS Group Holdings remains the most resilient. It fell to $28.63 before rebounding. A more substantial support appears at $26.90.
Oversea-Chinese Banking Corp fell to $11.56 before rebounding. This level should be viewed as a preliminary support. Similarly, United Overseas Bank’s intraday low of $24.95 on May 17 represents initial support.
Singapore Airlines, which peaked at $5.70 in April, and fell to a low of $4.50 on May 18, is likely to find support at the $4.08–$4.18 range. Its quarterly momentum is falling but may encounter support at its equilibrium line.
Sembcorp Marine is transitioning away from a rig builder focused on oil to a greener company. During its 1QFY2021 ended March business updates, the company highlighted a number of contracts in the renewable space, including a $1.12 billion contract for an offshore wind farm in the North Sea. Cash flow from renewables has yet to be reflected in the share price.
Technically, SembMarine made a minor peak at 22 cents on April 28 and retreated. Support for the retreat should have appeared at 18 cents. SembMarine stock made a low of 17.9 cents before rebounding. The 50- day moving average at 18.5 cents is likely to act as a support line. Meanwhile, the 100- and 200- day moving averages have made a positive cross. Stochastics has bottomed at the bottom end of its range and the 21-day RSI has turned up. ADX continues to fall. As a result, the rebound is likely to meet with resistance at 22 cents. The original breakout from 15.5 cents indicated an upside of 27 cents and this remains valid.
Sembcorp Industries is also transitioning to a greener company, as evidenced by the construction of its floating solar farm in Tengeh Reservoir. The solar power generated by this farm will meet the day-to-day energy needs for operations at PUB’s five local waterworks.
Technically, Sembcorp’s stock fell to a low of $1.91 on May 14, marginally below its still-rising 50-day moving average which is currently at $1.95, and rebounded. Stochastics is at the bottom of its range and quarterly momentum has rebounded off its own moving average. These underpinnings should support a further rebound from current levels. Resistance remains at $2.21. A successful break above this level provides the impetus to test $2.52.
