US Stocks
Daily index charts on the S&P500, Dow and Nasdaq do not appear meaningful at this point. A clearer picture can be found in weekly index charts. A great divergence in Moving Averages and “doji”s is a flag for caution. Currently, the US market seems to be supported by stability in the USD which is elaborated below.
USD
Dollardex has been ard the low 80s. 79 looks like a strong support. A look at the weekly trend over the past 2 years shows that the Fed is in control over the volatility of the USD. The stability of the USD despite the uncertainty and new measures in the US shall give confidence to investors of USD assets. This means that Bond and Stock markets have support and a sudden crash is not likely.
China, HK
Again, daily charts are not as meaningful. Weekly charts have turned clearly bearish with converging downside indicators and “dark clouds”. HK 10yr Gov bonds are swaying around high 93 – low 94, this is not normal and has a negative implication if it continues like this. As a benchmark, Singapore Gov Securities (SGS) are trading at high 104.
Singapore
SGD remains very strong with inflow above the norm. However, it seems that money is bring parked in the Bond market more than the Stock market, as we can see from the strength in SGS (SGS used as a benchmark for the Bond market). The Stock market shall remain stable as there is strength in the SGD so a sudden crash is also unlikely. However, weekly index chart is also more inclined to move negatively.
The bottom line
I suggest we take opportunity to unwind all positions. Any correction of as little as 5 – 10% shall give us an excellent opportunity to reposition. Blue-chips are generally more affected by macro trends but pennies may not be spared. Pennies that open high or get churned up may be “distributed” (in technical analysis terms) so it is necessary that we take caution.
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