[Week #38] 12th September – 16th September Singapore & US Market Technical Outlook

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SG SESSION (2,800 Critical Support Level to be Re-tested)

The Straits Times Index (STI) ended the week with a magnificent gain of of +2.5% (+69.41 points), erasing all the losses over the earlier 5 weeks.

As the US market remained quiet over the months. the modest trading range ended spectacularly on Saturday morning with a loss of -2.5% in S&P 500. It is likely to see the STI gapping down at tomorrow’s opening session to discount the keen jerk effect, that has already reflected on Asian markets today (Nikkei, Shanghai and Hang Seng).

I will be catching for reaction at the 2,800 major support level, with possibility to hold on this sell off period.

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US SESSION (S&P500 Breached 2,165 Support With Vigorous Follow Through)

The S&P500 ended the week with a loss of -2.4% (-52.17 points), with Friday posting its worst day since June 24 as the S&P 500 had gone 43 straight sessions without closing 1 percent higher or lower as of Thursday’s close.

The huge spike in volatility presented a much craved trading opportunity for directional traders who perceived the potential for a big directional move. The algorithms joined in, the technical levels were violated, and many were waiting for a break from the recent trading range that has been established over the past 7 weeks.  With the Global Equity Demand/Supply Index (Bloomberg) turning into its demand zone (reflecting a strong interest of institutional level to accumulate the correction), the following few days will present a long awaited opportunities to take short term directional trades with an increased risk appetite.

With the breach of support at 2,165 level, which is likely to dictate the next direction for S&P 500 for September, the next support level to watch for is at 2,120 resistance turned support level.

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

 

1. U.S. August retail sales report (Thursday)

The Commerce Department will publish data on August retail sales at 8:30AM ET (12:30GMT) Thursday. The consensus forecast is that the report will show retail sales rose 0.4% last month, after holding flat in July. Core sales are forecast to inch up 0.3%, after falling 0.3% a month earlier.

Rising retail sales over time correlate with stronger economic growth, while weaker sales signal a declining economy. Consumer spending accounts for as much as 70% of U.S. economic growth.

Besides the retail sales report, this week’s calendar also features U.S. data on consumer and producer price inflation, consumer sentiment, industrial production, as well as surveys on manufacturing conditions in the Philadelphia and New York regions.

 

2. Bank of England rate decision (Thursday)

Market analysts expect the BoE to stand pat on policy after a slew of robust data in the past week saw fears of a recession in the near term abate.

A Reuters poll of economists published earlier this month predicted that the British central bank will wait until its November meeting before slicing 15 basis points from its benchmark interest rate.

In addition, the U.K. Office for National Statistics will release data on consumer price inflation for August on Tuesday. The monthly jobs report is due on Wednesday, while data on retail sales is expected on Thursday.

The BoE cut interest rates to a record-low 0.25% at its August meeting and launched fresh easing measures in a bid to buffer the economy from a downturn following the Brexit vote.

 

3. German ZEW business survey (Tuesday)

The ZEW Institute will publish its September German business climate index amid expectations for a rebound to 2.5 from August’s reading of 0.5. The current conditions index is forecast to inch up to 56.0 from 57.6.

 

4. China industrial production data (Tuesday)

Market analysts expect factory output to rise 6.1% last month, after increasing 6.0% in July.

The Asian nation will release fixed asset investment data and a report on retail sales at the same time.

 

5. SNB policy assessment (Thursday)

Most economists expect the central bank’s benchmark interest rate to remain unchanged at -0.75%, despite improving economic developments and mounting criticism of its negative rates.

According to a recent Reuters poll, the SNB will also stick to its commitment to foreign currency interventions in order to reduce demand for the franc.

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