SGX Insider and Substantial Shareholder transactions for 26 - 30 Mar 07 & Market Commentary

Hi all,

Here are the more significant Insider and Substantial Shareholders transactions reported on the Singapore Stock Exchange in the past week:



The number of transactions reported over the past week was quite numerous, with the number of sell transactions greater than last week's. The selling by directors of Allgreen and Hotel Properties have also decreased. I shall leave it to the reader to browse through the transactions.

ASIAN MARKET COMMENTARY
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There were no major economic news from the Asian markets and as usual, most of their movements were influenced by what's happening in the US. The Straits Times and the Hang Seng Indices were more or less range bound while the Nikkei was on a small down trend. On the basis of relative strength, the Singapore and Hong Kong bourses fared better than their Japanese counterpart.

On the technical side, the weekly Nikkei chart is still hanging around its 10 week moving average. Stochastics is still at a low level suggesting there's still room to move on the upside. A strong indication of the resumption of the bull move would be when the 17,600 mark is broken, which is only about 200 points away. 200 points for the Nikkei in a day is a stroll in the park. But on the other hand, a breakdown through the 17,000 mark means the bears are gaining control.

 

US MARKET COMMENTARY
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The Consumer Sentiment Index reading dropped to 88.8 for the month of Mar'07, down from the 91.3 value in Feb'07. The core-PCE component of the Personal Income and Spending report edged up to 2.4% from 2.2%, causing widespread worry that the Fed would not be cutting rates and may even be raising rates. Another indicator that suggests the economy is still going strong is the Purchasing Manager's Index, which came in at 61.7 - a very strong reading after the index was bumping around the +-50% range for a few months. If this phenomenon holds up, the likelihood of a rate cut any time soon is going to be quite thin.

The other cause of fear of rising inflation is the rise in oil prices over the past week. It reached an intraday high of $68 per barrel and is now settling at around the $62 mark at the close of the week. The technical oscillators for oil are now in overbought territory and the likelihood of a correction or sideways move would be greater than a continued upmove. A more prudent trading strategy would be to wait for a move back to the 20 period moving average and buy when the stochastics head up again.

Earnings season is just a couple of weeks away, and if the theory holds true, the stocks of companies expected to do well are gonna get bought up leading to the earnings announcement day.

SHORT-TERM OUTLOOK
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The short top that was suggested last week played out nicely with the NASDAQ composite falling from 2455 to 2417, and almost unchanged for the last two trading days of the week.

On the close of last friday, here's what the short-term indicators are telling us:
(1) NASDAQ Market Breath Oscillator 2 : 0.135, up from low of -0.347
(2) Volatility Oscillator : 0.13, up from -0.21
(3) Put-Call Ration Oscillator : 0.02, up from -0.115
(4) Stochastics Oscillator : Oversold
(5) Put-Call Ration EMA : Rising but fell on Fri
(6) CBOE Equity Options Volume : Low

The MBO is only slightly positive, not enough to provide any substantial clue of possible direction in the next few days. But due to the oversold stochastics, the index could either move up and push the MBO into significant high ground, which increases the possibility of a short (usually one-day) pullback before resuming, or a further drop past the 2380 - 2400 support zone to set the tone for a possible rally once the MBO falls to a significant low level.

The Volatility Oscillator is at a level where reversals have a high probability of happening, while the PCR Oscillator is of a non-significant value.

So on an overall basis, there are two possibilities that can happen (i) market starts to rally, pulls back slightly and rallys again (ii) market sells off some more, then reverse and head up.

 

MEDIUM-TERM OUTLOOK
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I've now also added the Market Breadth Oscillator to the weekly NASDAQ chart, and it is used in the exact same way as the short term chart.

Here's what I see from the indicators:
MBO: Currently at where index moves up the following week
Stochastics: Just recovering from oversold
MACD: Bearish

Just like the Nikkei, it seems like the indicators are not in agreement, and the index can go both ways. A bullish confirmation happens when the 2460 mark is broken and a bearish confirmation when the index falls below 2380.

Integrating the weekly analysis with the monthly indicators, I do not think the index would stage a rally like the one in late Jul'06, because the market would be more likely to move either sideways or downwards. But there is still money to be made by trading the market swings even if a sideways move does materialise. The key is to be flexible.

 

Have a gd week!