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Asia Pacific Strategy - Alpha Edge: Testing support

Shared By Stock Fanatic on Thursday, February 8, 2018 | 8.2.18

■ US S&P500 is down almost 10% in just 7 trading days.

■ We believe it is still too early to tell if this was a major peak.

■ MSCI Asia ex-Japan support at 710pts is still holding.

■ Hong Kong Hang Seng's medium-term uptrend looks intact.

■ KLCI support trendline is at 1,780pts.

S&P500 down almost 10% in just 7 trading days
It was a bad fortnight for global equity markets, led by the US markets. The S&P500 lost almost 10% in just 7 trading days. The S&P500 reached as low as 2,593pts before the rebound yesterday. There was quite a lot of technical damage done in the past fortnight as the S&P500 broke below the 2,710pts support trendline with the next major support at 2,550pts. The weekly RSI support trendline was also broken this week.

Not certain if this was a major peak
However, we believe it is still too early to tell whether the end-Jan peak was a major peak for the S&P500 since the bull run started in Mar 2009. We would need another few weeks to see how the market performs.

MXASJ support still holding
For the MSCI Asia ex-Japan Index (MXASJ), the Index declined 9% from its peak in early Feb but the MXASJ managed to still hold above the 710pts support trendline. Next major support is at 625pts.

Hang Seng support at 29,600
Hong Kong’s Hang Seng Index’s medium-term uptrend looks intact with key support at 29,600pts, and next support at 26,000pts. This support trendline must hold as a break below this trendline would be negative for the index, in our view.

Shanghai Composite in uptrend channel
China’s Shanghai Composite Index looks to be trading in an uptrend channel with support at 3,300 pts. Weekly technical indicators look negative with the MACD looking to hook down while RSI is unable to overcome its resistance trendline.

KLCI support trendline is at 1,780
Malaysia’s KLCI almost tested the 1,780 support trendline yesterday before rebounding off its low; the next key support is at 1,720pts. Both the key support levels need to hold over the next few months.

STI weekly technical indicators facing resistance
Singapore’s STI also tested the 3,400pts support trendline yesterday before rebounding off the trendline; the next support is at 40-week SMA (3,335). Weekly MACD and RSI indicators continue to face resistance at the trendline and it is key that this support trendline at 3,400 holds. A break below this support trendline could see more downside for the index.

JCI uptrend continues while SET tests support trendline
Jakarta Composite’s medium-term uptrend remains with key supports at 6,300 and 5,900 pts. The index is poised to challenge the resistance trendline at the 6,800-6,900 levels. Thailand’s SET Index tested its 1,760pts support trendline yesterday before rebounding off the lows. SET needs to hold above this support trendline. (Read Report)

Source : CIMB Research


Posted on Thursday, February 8, 2018 | 8.2.18
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