Weekly Updates 15/5/23 – 19/5/23 May 15, 2023
This weekly update is designed to help you stay informed and relate economic and company earnings to potentially value-add your CFD (Contract For Difference) trading via hedging (risk reducing). This article should be used for educational purposes only and not as financial advice. We urge all traders to carry out your own due diligence before submitting trades.
*These prices are taken based on the previous Monday’s opening price and the preceding Friday’s closing price.
Last week’s market movements revolved around market participants’ expectation on CPI data coming out of the US. With CPI data coming out of China as well, analysts are starting to doubt the strength of China’s reopening and most China and Hong Kong indexes sold off. With increased tensions between US and China, and US’s debt ceiling talks still going nowhere, investors are more cautious moving forward.
Updates for the week (15 May 2023 – 19 May 2023)
The data below showing the economic releases read as “Analyst’s estimate/ Consensus | Previous data”.
The upcoming week’s economic news releases revolve around US retail sales advance, and China’s industrial and Retail sales data. These data will be essential as it will be able to paint the picture of the strength and resilience of the US consumer and the strength of the China reopening. Currently analysts are expecting strong numbers coming out of China and flatish results from the US. Investors and traders can position their portfolio to take advantage or avoid the upcoming macro news releases.
This week’s earnings mainly focus on the heavy weights in the Hong Kong Tech sector like Tencent, Alibaba, Baidu and Singapore investor’s favorites like SIA, Sea Limit, Grab and Singtel. This will be a big week for Hong Kong Tech stocks, as Hong Kong Tech stocks tend to be traded in a basket and if the heavy weights are not performing well, analysts and market participant’s expectations on smaller tech stocks will be lowered.
If you hold equity positions in these stocks, you can hedge your positions using CFDs to mitigate the risk of disappointing earnings releases.
For those looking to speculate or capitalize on the increased volatility, CFDs provide leverage and ease of going long and short across a broad range of products available.
Wilmar International Limited (SGX: F34) Trading Opportunity
Trade Set-up:
- F34’s share price has seen some recovery recently following its dividend ex-date on 27/04/23.
- From the chart, the orange, blue and black exponential moving averages (EMAs) represent the 20, 50 and 100 time periods respectively.
- The moving averages are currently in a downtrend, with the orange 20 EMA recently crossing below both the blue 50 and black 100 EMAs, signaling potential weakness.
Trade Execution:
- As of 12/05/23 market close, the daily chart above shows that price has retraced to the orange 20 EMA and rebounded slightly off of it.
- If the next daily candle breaks above the orange EMA, we can look to take a long trade and take profit at around the $4.03 level, where price opened after the gap.
- However, if price breaks below the 12/05/2023 candles low, we can look to enter a short trade and take profit at around the $3.85 level.
EURUSD trades new session low as selling bias increases
Trade Set-up:
- The EUR/USD pair broke outside of a mini 4 week trading range (consolidation) to end last week’s trading session. It can also be seen as an attempt to break-out of the channel that has bounded most of the price action since September last year as the uptrend channel loses momentum. The USD pushed to new highs as the market reacts to the inflation numbers from the Michigan sentiment index which rose to 3.2% from 3.0% last month.
- EUR/USD looks to be bearish bias as a price move further below the current level opens the door for further selling from a technical perspective. The faster SMA20 is expected to crossover the SMA50 and this could signal a downtrend, especially with the RSI staying below the 50 level.
Trade Execution:
- The setup suggests that investors will have better risk-reward should they look for short opportunities. The topside resistance area between the 1.0980 – 1.1100 handles could be used to protect short positions with stops in this area.
- Alternatively, investors can wait for the SMA crossover to happen first as a sell signal, and allow prices to retrace to the 1.0900 handle before establishing short positions.
If you have any feedback or questions, feel free to email us at samht@phillip.com.sg or onishathyeyn@phillip.com.sg or cfd@phillip.com.sg.
Disclaimer
This material is provided to you for general information only and does not constitute a recommendation, an offer or solicitation to buy or sell the investment product mentioned. It does not have any regard to your specific investment objectives, financial situation or any of your particular needs.
Accordingly, no warranty whatsoever is given and not liability whatsoever is accepted for any loss arising whether directly or indirectly as a result of your acting based on this information. Investments are subject to investment risks.
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About the author
Sam Hei Tung (Dealing) and Onisha Thye (Dealing)
Sam graduated from National University of Singapore with a Master of Science in Finance. He personally manages his own investment portfolio and does equity and economic research in his free time. Sam believes that education and information is essential to making good financial decisions.
Onisha is a dealer at the CFD Dealing Desk. She graduated from Monash University with a double major in finance and econometrics. Her natural curiosity for finance is what drove her to be in this field as she is fascinated by all the possibilities and opportunities that are available to grow one’s wealth, either through trading or investment.
