Trade Idea: MSCI Singapore Free Index

The Singapore stock markets saw a bounce in recent sessions and it may be attractive to look for entry levels on fresh short positions, given that the city-state markets are still in moribund conditions.

SGX logo
Source: Bloomberg

The Singapore Blue Chip Cash, which is similar to the MSCI Singapore Free Index and is strongly correlated with the Straits Times Index (STI) is currently trading at the 23.6% retracement level of 375.78.

I feel a move higher to the 38.2% retracement at 379.96 and into the 200-day moving average at 380.19 will present attractive levels for a modest short position. The move will coincide with the 14-day RSI indicator heading into the 50 mark, which has been untested in recent sessions.

To protect against a stronger up-move, stops could be placed at 390, just above the 61.8% retracement of the 15-April to 9-June sell off. Target profit areas at 360 -365 may provide a good risk-reward trade.

Singapore Blue Chip
Click to enlarge

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This information has been prepared by IG, a trading name of IG Markets Limited and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. International accounts are offered by IG Markets Limited in the UK (FCA Number 195355), a juristic representative of IG Markets South Africa Limited (FSP No 41393). South African residents are required to obtain the necessary tax clearance certificates in line with their foreign investment allowance and may not use credit or debit cards to fund their international account.