The Week Ahead Feb 2022 - [STI, HSI, NASDAQ & S&P]

Another volatile week for the US as Ukraine-Russia tension grew and markets pulled back on fear of war breaking out over there. China continues to push new regulations with the latest on Friday issuing guidance for online food delivery platforms to reduce service fees to help to lower operating costs for catering businesses. This sent Meituan (3690.HK) down 15% . Singapore once again fair better than the West BUT it might be time to take a break from the weeks of gains. As we enter a new week, tensions of war along side with rising inflation will continue to haunt the markets. S&P 500 has also closed below its 200 days moving average, are we expecting more downside? Read on to find out more.

Key Events to Watch For

Tuesday – CB Consumer Confidence (Consumer Confidence measures the level of consumer confidence in economic activity. It is a leading indicator as it can predict consumer spending, which plays a major role in overall economic activity. Higher readings point to higher consumer optimism.)

Thursday – US GDP Q4, Gross Domestic Product (GDP) measures the annualized change in the inflation-adjusted value of all goods and services produced by the economy. It is the broadest measure of economic activity and the primary indicator of the economy’s health.

Initial Jobless Claims, Crude Oil Inventories

Friday – Core Durable Goods Order (Core Durable Goods Orders measures the change in the total value of new orders for long lasting manufactured goods, excluding transportation items. Because aircraft orders are very volatile, the core number gives a better gauge of ordering trends. A higher reading indicates increased manufacturing activity.)

Technical Levels to Watch For This Week

STI

As mentioned last week, its good for STI to have some pullback so that traders and investors can move in. A spinning top pattern like candlestick formed on Thursday and with Friday’s candle closing lower, we might see more downside this week. Some support levels we’re looking at, 3400 then 3368 first. Banks continue to hold the index up, although we have seen pockets of Blue Chip stocks moving up especially the recovery play ones like SATS, Comfort, SIA Eng and even Thaibev. We’re continuing to focus on these recovery stocks.

HSI

Just as HSI was gaining some grounds, but China has decided to enforce more regulations regarding online delivery to reduce their service fees to spur greater economic growth. That sent the HK markets into a dive sparking another round of sell off as investors worry of more regulatory crack down. Tencent, Alibaba, JD all took a hit and we’ll wait for a base to form once again to look for entry. HSI might see more downside to about 23647 before finding some support

S&P 500

The S&P 500 has closed below its 200 days moving average for 2 days straight. Its not a good sign and has to regain above this in the next 2-3 trading days if not be prepared for more downside. Overall, if S&P 500 tests the previous low, we’re only at about 12% correction which is still possible for a further downside to even 15-18%. So hang on tight as markets grapple with the ever changing tune of Russia- Ukraine tension. Bracing for more downside. to 4290 first.

Nasdaq 100

Nasdaq also is below the 200 moving average for the past week and is structurally weak which signals more downside. Tech stocks continue to struggle with ongoing concerns of more rate hike throughout the year. A pullback to 13448 wouldn’t be surprising as that would represent about 20% price correction.

Hang in tight if you’re invested into fundamentally good stocks with wide economic moat.

For traders, do stick to your stop loss and be disciplined especially during such times. Hedging is also a strategy to adopt for this year as we uncover the benefits and reasons for this strategy last week.

Have a fruitful week ahead.

Yours

Humbly

Kelwin & Roy

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