Resilient Equity Markets, Anticipating Stimulus in China

The equities market enjoyed a surge last week, bolstered by the successful resolution of the US debt ceiling crisis. Additionally, the release of promising US jobs data and a better-than-expected report on China's manufacturing sector offered further impetus to the markets.

In the East, despite ongoing efforts to stimulate its economy following the lifting of lockdown measures, China continues to grapple with a challenging recovery process. This struggle is primarily due to an economic crackdown and weak exports. As a result, market analysts anticipate that Beijing will amplify its stimulus strategies to rekindle domestic growth.

Based on these positive signals and the prospect of increased stimulus, alongside appealing valuations, we anticipate this upward trend to persist.

JD.com (9618, HK): Expecting Trend Change. Weak supply effort observed with relative strength and fund flow improving. We expect rebound to continue towards HK$160 level, with stop loss price below HK$122.70

Our trading strategy this week will be to continue seek out opportunities for long trades in both the US and China markets.

Headlines for Week Ahead:
US Services PMI
China Trade Data
China Inflation
SG PMI

Disclaimers apply

Wyckoff's Law of Effort

Law of Effort Wyckoff's Law of Effort states that on any single trading day (or week depending on time frame), huge volume (effort) push by participants should see huge price movement, resulting in a wide spread (long body). This is a basic principle of effort and result. However, as per Singtel's case study, we saw huge selling volume on 11 May, yet the price action only shows a narrow spread (small body). This divergence of effort and result in Wyckoff's Law of Effort principles, indicates possible exhaustion in selling or hidden buying. Thus, with a lack of weakness, Singtel should continue trading range bound for the coming days or weeks till further strength or weakness is observed. Swing Traders who trades range can consider positions at 3.70-3.72, with exit target 3.76-3.78.

Markets searching for technical support

Thoughts on Week Ahead: Week 21 Aug 2023 Markets searching for technical support US FOMC minutes have confirmed market’s fear of a hawkish US FED. This fear has triggered a continued sell-off in global equities over the past week. China economy and policy did not help too much either. China Evergrande filed for chapter 11 in US while Country Garden future remain uncertain as investors continue to keep an eye for a more aggressive policy from Beijing to support the economy and people’s confidence. From a technical perspective, markets are searching for technical support levels, where bargain hunters are willing to come in. Support levels are 4,300 for S&P 500 and 3,130 for STI. For the week ahead, market participants will be zooming in on US FED Chair Powell’s speech at the Jackson Hole meeting. We did not uncover trading (tactical) set up for the week ahead and will update once we identify any. Have a great trading week ahead. Headlines for Week Ahead: Key corp earnings (Nvidia

Thoughts on Week Ahead: Week 28 Aug 2023 Looking out for technical reversal indication Past week was an eventful one, with significant developments ranging from the arrest of former US President Donald Trump to BRICS expanding its membership to include financial powerhouses Saudi Arabia and the UAE. However, the focal point for the financial markets remained the speech by the US Federal Reserve Chair at Jackson Hole. The Chair highlighted that current economic condition is more favorable and hinted at holding rates during the Sept FOMC meeting, but also suggested a possible 25 basis points hike later in 2023, aligning with market expectations. Personal view, mixed rate outlook could suggest potential interest rate pivot (peak). Currently, both the S&P 500 and Hang Seng Index are in the process of establishing support levels at 4,300 and 17,800, respectively. We are closely monitoring these markets for signs of supply exhaustion, which would indicate a potential reversal. Intuit

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