Saturday, 14 September 2019

Market Watch – Optimism and Money Avalanche?

Three news caught my attention over the past few weeks.

Firstly, there was growing optimism from the trade war after US and China offered concessions to exempt some trades from tariffs. All eyes will be on the outcome of their Oct 19 meeting.

Secondly, many global central banks (Source), notably European Central Bank (ECB) this week, had decided to turn on the stimulus taps. The ECB planned to cut interest rates to -0.5%, start printing money again and buy €20M in bonds and other financial assets per month starting in Nov 2019. Looks like there would be an avalanche of liquidity flooding the market. 

Lastly, there are market expectations for FED to reduce interest rates further, especially after their meeting next week.

While the STI has risen, the volume and price increase was somewhat tamer than expected. It is likely that many investors were still assessing the market direction before deciding what to do next.

In my opinion, the Oct meeting would likely not have a firm resolution to end the trade war. But there is definitely a good chance for some positive announcements as the trade war have hurt both countries. It is also in both sides’ interest to end the year on a more positive note. I also believed that the avalanche of liquidity could artificially inject a bullish effect into the market.

I am looking into the charts of STI and DBS as market benchmarks. For STI chart, the market seems to be going slightly downtrend or sideways. For DBS chart, there is a good chance of a wedge forming, that could lead to a potential upward breakout.

In my previous post, I shared about the start of my technical analysis journey. Though I have realised gains from trades in DBS and SATS, have noted many areas of improvement after my self-reflection. To this, I look forward to making better trades next time. 😊


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1.       How am I starting on my Technical Analysis journey?

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