STI has fallen 9 out of 10 sessions! (4 May 16)

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STI has fallen almost 191 points, or 6.4% from 2,964 on 21 Apr 2016 to close 2,773 on 4 May 2016. The fall was mainly attributable to risk off attitude arising from the sharp surge in JPY due mainly to the surprise from Bank of Japan Meeting last Thurs; lacklustre corporate results and weak economic data from China and U.S. etc.

Based on Chart 1 below, STI has fallen below all the exponential moving averages which is not a good sign. Fortunately, there is no death cross formed at the moment. In addition, ADX closed at 18.7 which is still below 20, indicative of a lack of trend. RSI closed at 35, a three-month low. My personal opinion is that STI should find good support at 2,750 and strong support at 2,680 – 2,700.

Chart 1: STI fell 191 pts in the last two weeks

STI chart as of 4 May 16

Source: CIMB chart as of 4 May 2016

For those who are waiting for the market to pull back to increase your equity exposure, I have used Bloomberg to screen some stocks using the following simple criteria (See Table 1 below):

a) Market capitalisation in SGD terms >=S$400m;

b) Analyst coverage with potential capital upside >=0%

Table 1: Top five companies sorted by the largest total potential capital upside

Top 5 stocks sorted by potential return 3 May 16
Source: Bloomberg as of 3 May 2016

 

Some noteworthy points

a) The above is compiled from Bloomberg and there is a possibility that Bloomberg may not have captured all the updated target prices from the various analysts;

b) Readers who are on my website sign-ups will be able to see the entire compilation of stocks above.

As mentioned in my write-up dated 22 Apr 2016 (see here), I have been cautious with only 15% invested as of 22 Apr 2016. Since 22 Apr, I have increased my percentage invested from 15% on 22 Apr 2016 to around 40% now in anticipation of the results period. Although my comfort level on my percentage invested is around 30 – 50%, I may increase above 50% temporarily in the next couple of weeks for short term opportunistic trades. (My clients will be duly informed on new stocks which I have entered and any significant portfolio change.)

As mentioned previously, readers who wish to be notified of my write-ups and / or informative emails, they can consider to sign up at http://ernest15percent.com so as to be included in my mailing list. However, this reader’s mailing list has a one or two-day lag time as I will (naturally) send information (more information, more emails and more details) to my clients first. For readers who wish to enquire on being my client, they can consider to leave their contacts here http://ernest15percent.com/index.php/about-me/

 

Lastly, many new clients have asked me how I screen and decide which companies to take a closer look / write. To understand more about my basis of deciding which companies to write, you can download a copy of my eBook available on my website here. 

 

P.S: Do note that as I am a full time remisier, I can change my equity allocation fast to capitalize on the markets’ movements.

 

Disclaimer

Please refer to the disclaimer here

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