Property-related stocks take a breather, STI likely to stay in corrective mode

The price ascent of property-related stocks like Singapore Press Holdings (SPH), and those with limited free float such as United Industrial Corp, have stopped temporarily. Other stocks, such as OUE — which probably peaked on April 14 in the form of a shooting star on the candlestick chart — may be getting ready for an exhaustion gap.

The SPH stock has almost doubled since its low of $1 in November 2020. The move down to $1 and out of it formed part of a major multi-month base formation. Hence, the ability of this stock to climb through February to April was not a surprise. The initial target was $1.60, before it was lifted to $1.90. The roundophobic $2 mark coupled with a resistance at this area was always likely to cause prices to halt. Even if SPH builds a minor top, its moving averages continue to rise. In addition, long term momentum indicators such as one-year and twoyear momentum indicators and their smoothed counterparts are rising. Hence, prices should be able to find support at the initial target of $1.60, and build a base from there to retest $2.

OUE’s outlook is obvious following the formation of its shooting star. The stock is in the process of covering a gap. In theory, gaps that are quickly covered are usually exhaustion gaps. This gap gets covered at $1.40. In the chart, climactic selling is evident in the high volume that accompanied the shooting star on April 14 this year so an exhaustion gap cannot be ruled out.

City Developments is the stock most attuned to Singapore’s property market. Although it has recovered from the worst of the sentiment arising from its impairment in Sincere Property Group, prices turned down in early April after rising to a high of $8.28 on April 1.

At the same time, quarterly momentum has turned down and is now testing its own support at its equilibrium line and moving average. In the meantime, the 50-, 100- and 200-day moving averages have coalesced at the $7.67 to $7.73 range causing this level to be an important support.

We have a report on Hanwell in our Edgewise column. Hanwell’s price chart is in the form of a staircase from April 2020. Prices are now at 10-year high. In fact, prices were only higher than current levels of 46 cents before the global financial crisis when they hovered at the 90 cents to $1 level. Of course there is nothing in the chart that says prices cannot go higher.

Elsewhere, the banks look somewhat tired. DBS Group Holdings, he best proxy-retested $29 but may not be able to overcome this resistance area in the near term. Its quarterly momentum appears poised to retreat. If the banks ease further, the main barometer — the Straits Times Index — would probably ease as well.

But that is how the index appears. After falling sharply on Apr 21, and rebounding mildly on Apr 22, the STI may ease further. Its quarterly momentum is struggling and the tussle could be resolved on the downside. In addition, short term stochastics and 21-day RSI are falling.

In the immediate term, the STI may continue to stay within the 3,150-3,220 range. The uptrend may not resume by the end of the month - which is the coming week. If the index breaks below 3,150, the consolidation may linger on for a “sell in May and go away” theme.

The original break above the narrow 3,071 to 3,118 range in the week of March 15 to 19 still remains valid as does the upside of 3,368 to 3,377 but this may take a longer time frame to achieve.