STI is telling a GE story...
It is Singapore’s General Election and today is Polling Day.
And like previous elections, (2016 US Elections, 2019 Indonesia Elections) there has been some correlation between the equity market with the election outcome. This is based on the collective consciousness, institutional positioning and the retail market sentiment, 0us a huge dose of critical thinking of multiple parameters. And it cumulates into technicals as an indicator.
From the STI daily chart, we saw that the recent rally from below the 55EMA continue into this week, and then suddenly reversed as the short week went by. There was no major events nor data this week for Singapore, and that provided some clarity in the technicals forming from sentiment. The STI technicals started turning bearish with a candlestick Bearish Dark Cloud Cover pattern mid-week, which was reiterated with a bearish engulfing again, a day before Singapore headed to the polls. A favorable MACD cross into the bullish territory is now at risk of reversal, and technically looks like there is a higher probability towards a post-election sell off.
With historical trends, the incumbent party should still continue to win, but not by a landslide, and the technicals suggests a huge dent in the percentage win... projected to be about 62-63% overall win margin. Given that 2020 has been a year of many unprecedented outcomes, a possible risk of <60% win margin (59%) might be the downside risk.
This is what the chart is telling... no expected landslide, and a dent in confidence; hence the market appear to be positioning itself already.
Let us see...
And like previous elections, (2016 US Elections, 2019 Indonesia Elections) there has been some correlation between the equity market with the election outcome. This is based on the collective consciousness, institutional positioning and the retail market sentiment, 0us a huge dose of critical thinking of multiple parameters. And it cumulates into technicals as an indicator.
From the STI daily chart, we saw that the recent rally from below the 55EMA continue into this week, and then suddenly reversed as the short week went by. There was no major events nor data this week for Singapore, and that provided some clarity in the technicals forming from sentiment. The STI technicals started turning bearish with a candlestick Bearish Dark Cloud Cover pattern mid-week, which was reiterated with a bearish engulfing again, a day before Singapore headed to the polls. A favorable MACD cross into the bullish territory is now at risk of reversal, and technically looks like there is a higher probability towards a post-election sell off.
With historical trends, the incumbent party should still continue to win, but not by a landslide, and the technicals suggests a huge dent in the percentage win... projected to be about 62-63% overall win margin. Given that 2020 has been a year of many unprecedented outcomes, a possible risk of <60% win margin (59%) might be the downside risk.
This is what the chart is telling... no expected landslide, and a dent in confidence; hence the market appear to be positioning itself already.
Let us see...
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