[Week #37] 5th September – 9th September Singapore & US Market Technical Outlook

2016Sep-Straits Times-800x600

SG SESSION (Broken 2,800 Critical Support, Sitting on Lower Downtrend Line)

The Straits Times Index (STI) ended the week with a loss of -1.9% (-53.73), breaching the major support zone at 2,800.

The strong correction in STI has been reflecting some relief of its downside pressure, with the market closing 3 consecutive days of Doji Candlestick Patterns reflecting indecision on increased transaction volume. This implies a step in of accumulation pressure. This is also reflected in the Global Equity Demand/Supply Index (Bloomberg) turning up, reflecting a strong interest of institutional level to accumulate the correction.

With STI trading at the support of its lower downtrend channel, it is likely to see an imminent recovery in the opening session. The levels to watch for the week are 2,880 major resistance level which would negate the establishment of this downtrend channel, with support to watch for at 2,770 level.

 

2016Sep-S&P 500-800x600

US SESSION (S&P500 Supported by 2,165 level)

The S&P500 ended the week with a gain of +0.5% (+10.94)  The decrease in Average True Range (ATR) of S&P 500 reflects the low volatility environment we are currently in. There has not been a daily 1% move since early July, which is much lower than the normal August volatility.

It has been a really interesting week with S&P 500 beaching its minor and common gap support at 2,165 level (highlighted last week), failing to maintain its weakness and rebounded back above this level 3 times out of the last 6 trading days.

At the current junction, a breach of resistance at 2,195 level  (all time high) or support at 2,165 level is likely to dictate the next direction for S&P 500 for September.

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5 things to watch on the economic calendar this week (an extract and summary of investing.com)

 

1. European Central Bank Policy Meeting (Thursday)

The consensus is that the ECB will leave interest rates on hold for the time being, while Draghi is forecast to strike a dovish tone and perhaps hint at further stimulus to offset the hit to the economy from Britain’s decision to leave the European Union.

A recent Reuters poll of economists showed that slow growth and virtually non-existent inflation will force the ECB to extend and expand the scope of its asset purchase program in the coming months.

 

2. Chinese Trade Report for August (Wednesday)

The report is expected to show that the country’s trade surplus widened to $58.3 billion last month from $52.3 billion in July.

Exports are forecast to have dropped 3.5% in August from a year earlier, following a decline of 4.4% a month ago, while imports are expected to slump 1.2%, after plunging 12.5% in July.

Additionally, on Friday, the Asian nation will publish data on August consumer and producer price inflation. The reports are expected to show that consumer prices rose 1.7% last month, while producer prices are forecast to fall by 1.0%.

 

3. U.S. ISM Services PMI (Tuesday)

The gauge is expected to inch down 0.5 points to 55.0. Anything above 50.0 signals expansion.

The data takes on extra importance after the ISM manufacturing survey published last week showed a shocking contraction in activity.

Besides the services PMI, the coming holiday-shortened week could be a relatively quiet one with Wednesday’s Fed Beige Book release and JOLTS jobs turnover data also in focus.

 

4. U.K. August Services PMI (Monday)

The services PMI is forecast to improve to 50.0 from 47.4 a month earlier.

Data released last week data showed that the manufacturing and construction PMI’s both beat expectations, suggesting that the British economy remained resilient in wake of the U.K.’s decision to leave the European Union.

 

5. Reserve Bank of Australia Rate Decision (Tuesday)

Most economists expect no policy change, after the central bank surprised with a 25 basis point rate cut at its previous meeting to a historic low of 1.50% in an effort to boost sluggish inflation and spur economic activity.

 

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