SG SESSION (Short Term Uptrend Channel, Bearish Island Top Reversal Observed)
The Straits Times Index (STI) staged a strong rally of +4.1% (+115.62 points) during the week. This rally sees STI break above its immediate resistance level at 2,908. Do note that the breakout of this level is accompanied with low transacted volume and the two gap up candle that happened on Thursday and Friday session has created a Bearish Island Reversal
Note: Island Reversal is a candlestick pattern with compact trading activity within a range of prices, separated from the move preceding it. This separation is said to be caused by an exhaustion gap and the subsequent move in the opposite direction occurs as a result of a breakaway gap.
The levels to watch for the week are 2,945 resistance level, and support to watch for the intact of this uptrending momentum is 2,890 window support level.
US SESSION (Significant Bearish Divergence Observed)
The S&P500 rallied +1.6% (+33.13 points) during the week, erasing the previous week losses. As highlighted last week, S&P500’s weakness reflected in the indicators 1) Bearish Divergence still persisting in MACD Histogram, 2) MACD Bearish Crossover 3) RSI Double Top Breakdown 4) Volume Divergence is still persisting within its indicators. At current junction, S&P500 broke the resistance at 2,075 heading towards the next immediate resistance at 2,100 level, just a mere 35 points away.
The levels to watch for the week is 2,100 immediate major horizontal resistance level. The immediate major support zone to watch is 2,018 level for the short term uptrending momentum to remain intact.
5 things to watch on the economic calendar this week
1. Doha Oil Freeze Talks
Talks in Doha between some of the world’s major oil producers are expected to result in a draft accord on freezing output in a bid to stabilize the global market.
Saudi Arabia and Russia have approved a deal to freeze output at January levels until October 1 and other producers are expected to also do so.
Crude oil prices have rallied more than 30% since the proposed freeze was first put forward in February.
But analysts have cautioned that freezing production near current levels is unlikely to reduce the global supply glut.
A slew of companies are to report results, including Goldman Sachs Group (NYSE:GS), Alphabet, Microsoft (NASDAQ:MSFT), Coca-Cola, Visa, and General Electric (NYSE:GE).
Analysts expect Morgan Stanley (NYSE:MS)’s first-quarter profit to have plunged in what is widely being considered the worst start to the year for the banking sector since the global financial crisis.
Johnson & Johnson (NYSE:JNJ) will kick off the earnings season for large U.S. drug makers.
3. U.S. housing data (Tuesday)
Housing starts are expected to have dropped to an annual pace of 1.170 million units in March from 1.178 million units in February.
Building permits are likely to have increased to a 1.2 million-unit rate last month.
Existing home sales are expected to have rebounded by 3.5% in March after dropping 7.1% in February.
4. ECB rate announcement (Thursday)
Last month the bank unveiled a raft of new measures, including interest rate cuts, additional monthly bond purchases and more cheap loans to banks.
5. Euro zone PMIs (Friday)
The data is expected to show that growth remained subdued but attention will be on the output price index for signs of inflationary pressure.