Where Keppel's Price Would be Heading Next?

 

20 July 2023

Keppel's price climbed from S$4.50 in February 2023  to an all-time high of  S$7.40 in August.  This is a price rise of about 65% in the last 6 months.   It is quite a price jump.

We are now beginning to witness Keppel starting to do a serious correction.  This is because Keppel’s price chart:

a)   has not only broken the supporting trendline T2, it has also broken the 50-day moving average;

b)   has it's the Bollinger band started to expand;

lastly,  we are beginning to see the global market prices doing their corrections.  The US market was down lately, and one US analyst expected the US market to correct as much as 10%.   We are also beginning to see the Chinese Economy losing its steam in the 2^nd quarter of 2023.

(Note that we have been using the newer charting tool because the chart from investing.com has not been price adjusted for the distribution in specie (DIS) of SembCorp Marine shares in February 2023) 

When was the last Serious Correction?

The last serious correction happened in 2022.  That was when China's economy was badly affected by the zero Covid policy. Then there were protests going on in many cities against the Chinese Government.  

Reuter has this news report that China's 2022 economic growth was one of the worst on record.   

During that difficult period,  we have seen Keppel’s prices not only breaking the 50-day moving average but also touching the 200-day on 2 occasions (marked as Pt1 and Pt2 in the following chart).

But the news that China was about to end the zero Covid policy and open its doors towards the end of December 2022 lifted the market sentiment.   This has not only stopped Keppel’s prices from sliding further but also seen a 20% price jump in February 2023.  Since then,  Keppel's prices changed their track.  This is because the Chinese Economy was predicted by the official news to recover and run much faster in the post-Covid period  

 

Where would the Price be going? 

Moving forward,  we expect Keppel’s price to test S1 @ S$6.45.  This is also where the 100-day moving average is located.  It might want to test S2 @ S$ 6.25 if the global market condition has not improved.

For the moment, we expect Keppel’s price will leave the 200-day moving average alone,  not until the global market has turned for the worst.  This is because the Distribution in species (DIS) of Keppel Reit announced recently will resist the falls. 

 

When will be the right time to re-enter the market?

The technical book is advising us to wait until :

a)  the MACD and its signal line have completely closed up and started its upward climb just like those good days before,  plus,  most importantly; 

b)  the MACD's climb must be supported by a rising Chaikin Money flow to show that smart money is flowing into the market.

Presently,  the Keppel’s MACD and its signal line have a tendency of widening which could mean the fall might be extended;  also,  the falling of the Chaikin Money flow is supporting such a move.

Disclaimer:  This article is for information and educational purposes.   Readers are advised to conduct their own research and study to make their own investment decisions

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a)  Singapore Stock:  Keppel Corporation Limited (SGX: BN4)