Possible technical rebound on Keppel and SembMar

Most traders may not be expecting any meaningful rally in the next few weeks as the bullish impact of Budget goodies could dissipate within days amid renewed bearish developments in the US on top of a slew of likely earnings shocks during the current reporting period.

So far the market has reacted differently to the results of 2 key index stocks, SPH ($2.70) and SGX ($5.20). While the former continues to fall post-results, down 17.6% from an early Jan high of $3.29 to $2.71 low today, SGX which also dropped from $5.88 high to $4.93 on announcement date Jan 15, has rebounded to as high as $5.29.

This raises hopes that the market will continue to price in earnings disappointments going forward with the next major release on Budget day itself Jan 22 by Keppel Corp ($4.08).

It is now down 25.6% from early Jan high of $5.44, an even worst performance than DBS ($8.70) which had bounced off from $8, which was a 22.9% drop from $10.38 in early Jan.

DBS is still nearly a month away from its Feb 13 results date but its early rebound raises hopes that current underperformers led by KepCorp, UOB ($11.90) and SembCorp Marine ($1.59) could stage technical rebounds in coming days.

Traders should watch out for sharp intra-day falls to or below their lows last week when the STI hit intra-day low of 1694 on Thursday as oversold situations will emerge.

An example is KepCorp is now down almost twice the STI’s 13.6% loss from 1960 to 1694 last week, but it also had a strong rebound from Oct’s intra-day low of $3.35 to $5.44.
In fact it has retreated below the 61.8% fibonacci retracement ($4.15), which was the close on Oct 28 when it hit $3.35 year’s low.

Oversold indicators come from RSI, down from 70 to 39 now although short term MAs which made a bullish cut earlier this month have quickly reverted to a bearish cross soon after.

Any further weakness ahead of Thursday’s results around to $3.90-$4 which is a key multi-year support offers trading chances. Resistance is around $4.40-60 (Today’s high is $4.30).

Fellow offshore play SembMarine ($1.59) too is near last week’s $1.55 low, which is 24% from early Jan high of $2.04. Parent SCI ($2.22) has rebounded after losing 23.6% from $2.75 to $2.10 last week.

The latter has rebounded to $2.24 while SCM should hold up around $1.50 and not test its historic $1.40 support area. RSI is holding up at 43, better than KepCorp although short term MA behaviour seems alike. Resistance is around $1.80-90.

Sponsored Links