The Wall Street celebrated a second day of equity rebound with Dow Jones Industrial Average rallying over 400 points or 1.7% last night.

Volatility, however, remained at elevated level as market confidence has not been completely restored following last week’s rout. Despite mild recovery of equity markets globally, investors remains sceptical on this rebound. CMC’s client sentiment shows that top clients who are taking a position on the S&P 500 Index have increased their short positons by 11% overnight, marking a 67% bet on market downside versus 33% on the upside.

Client Sentiment – US SPX 500 - Cash

Technically, the S&P 500 index has fallen over 6% this year and its near-term trend has turned bearish. Both of its 10-Day Simple Moving Average line and SuperTrend (10,3) have both turned downwards last week, suggesting bearish side is taking over control. Momentum indicator RSI has bottomed out from the oversold zone below 30% to 37%, suggesting heavy selling pressure is vanishing. If S&P 500 can find strong support above 2,645 (50% Fibonacci Extension) area in the days to come, we will probably see a ‘golden cross’ formed in its MACD, which usually serves as a buy signal.

Singapore’s Straits Times Index climbed 7 points or 0.23% yesterday with diverging sectoral performances. Banks were leading the gain backed by strong earnings from DBS and assumption that rising interest rates are in favour of their net interest margins. Offshore and Marine, however, slumped as crude oil prices suffered their biggest weekly loss in nearly a year. Singapore Exchange’s share price tumbled over 7% to S$7.3 area largely due to the news that Indian bourses will stop licensing Index, stock prices to foreign exchanges, which will impact SGX’s popular index future Nifty 50 and other Indian linked futures and options.

China A-share market rebounded yesterday and investors can finally take a breath after four-days of heavy sell-off. The Hang Seng Index, however, suffered from last-hour selling and erased earlier gains. Confidence remains fragile in this market. Rising interest rate and tightening liquidity are risk shadows hovering above the market.

US SPX 500 - Cash

 

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