Technical Analysis: The Phillip 20 – January Monthly Review February 12, 2018

“The Phillip 20” is a portfolio of our top technical stock picks on SGX.

The “Phillip 20 portfolio” performance
• January monthly return: +2.90%
• Total return since May 17: +8.29%

  • New Entries: YZJ Shipbldg SGD and Sunningdale Tech
  • Take Profit: –
  • Stop loss: Singapore O&G
  • Total return since May 17 to January 18 is +8.29%
  • All eyes on the 3354 – 3341 support area for the uptrend to remain intact for the STI

January was a smooth sailing month as the Straits Times Index (STI) rose +3.85%. However, the fireworks only appeared in early February where the sharp selloff finally occurred. With all the excessive buying since 2017, the Relative Strength Index (RSI) was lifted into extreme overbought condition and correction of such large proportion is part of the rebalancing act between the buyers and sellers.

The STI formed the next higher high (HH) point on 24 January after testing the 3600 psychological round number before entering into a period of sharp correction. The current selloff underway is way overdue considering how far and fast the market has been rising for the past year without seeing any form of sharp correction. That bullish momentum lifted the RSI into extreme overbought condition recently in late January to a high of 75. As a result, a sharp selloff of 7% appeared after price hit a high of 3611.

STI Daily Chart – key support area at 3354 – 3341 area

1

Source: Bloomberg, PSR
Red line = 20 period moving average, Blue line = 60 period moving average, Green line = 200 period moving average

Nonetheless, the long-term uptrend remains intact. Some sign of stabilization appeared lately after the 3354 – 3341 support area halted the selloff.

Currently, the key level worth watching is the 3354 – 3341 support area and 200 day moving average. That will be the pivotal point for propping the long-term uptrend higher.

Keep in mind the RSI has also normalized back to the 30 oversold range suggesting for a recovery higher next.

Performance for the Phillip 20 portfolio in January remained rather muted at +2.90%.

2

Winners

There are no trades closed with a take profit in January.

However, we have decided to close out our position in PanUnited today at 0.420, 9 February as the technical outlook became obscured after the dividend/distribution paid in script announcement in December. Existing shareholders will receive 1 Xinghua Port Share for every share held by shareholders, and the pre-IPO reserve share price is at HKD 1.46. As a result, this trade contributed 1.06% to the “Phillip 20 Portfolio”.

Losers

Unfortunately, SOG triggered its stop loss at 0.420 on 11 January 2018. As a result, the “Phillip 20 Portfolio” fell -0.71% due to this trade

New Entries

YZJ Shipbldgs SGD and Sunningdale Tech were both added to the “Phillip 20 portfolio” in January. Unfortunately, both YZJ Shipbldgs SGD and Sunningdale Tech triggered their respective stop loss at 1.45 and 1.81 respectively during the sharp sell-off day on 6 February 2018.

3

Watchlist

After a major reshuffling of the portfolio, there are currently 16 stocks within the “Phillip 20 Portfolio.” The following is the revised watch list that we are closely monitoring:

4

Comments

Be the First to Comment!

Notify of
avatar
wpDiscuz

About the author

Profile photo of Jeremy Ng

Jeremy Ng
Investment Analyst
Phillip Securities Research Pte Ltd

Jeremy specialises in Technical Analysis and has 10 years of experience in studying price action. His areas of expertise include intermarket analysis on the equities, currencies, commodities and bonds market.

He is also a regular columnist on The Business Times - every Monday ChartPoint column.

He graduated with a Bachelor of Science in Banking and Finance from University of London.

Get access to all the latest market news, reports, technical analysis
by signing up for a free account today!