Where SembCorp's Price is Heading?

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1)   29 August 2023: SembCorp to be listed in the MSCI S'pore

2)   27 August 2023: SembCorp Testing the Support S1

3)   15 August 2023: Is SembCorp Suffering from a Pump and Dump?

4)   04 August 2023: SembCorp Announced Profit Surge of 56% for First-Half 2023

5)   31 July 2023: SembCorp Establishing S$5,000,000,000 EURO MEDIUM TERM NOTE

6)   04 July 2023: SembCorp Technical Analysis from 4 July to 28 July

7 September 2023

SembCorp closed yesterday with a price of S$ 5.08 which is 2.7% down from Tuesday's closing price of S$ 5.22.   SembCorp's price has lost a total of S$1.01 or 17% since 7 August 2023 when the news about SembCorp being listed in MSCI Singapore was first spread in various forums.  

This article will try to find out where SembCorp's price might be heading.

The reason why SembCorp’s Price was Falling

In the last article dated 1 September, we explained that Sembcorp stock demand would increase when it rejoined the MSCI index.  This is due to an effect called  S&P Phenomenon.    Unfortunately,  this S&P Phenomenon did not cause SembCorp’s price to rise but fall because the MSCI Singapore had not been performing to its best lately.    

Will SembCorp’s Price Rise Soon?

Many traders were expecting SembCorp’s to rise sooner because it has fallen quite a lot and SembCorp has reported a sterling result for 1H2023  Some even speculated the price would rise even faster and quicker than before if history can repeat itself.  Let’s examine in this article if this is possible from the angle of Technical Analysis.

Technical Analysis

Unfortunately,   the Technical Analysis from the following chart is telling us a different story.   This is because there are at least 3 weaknesses in SembCorp's technical chart.

First,  we see a dead cross with 20-day MA cutting below 50-day MA;  then,  we see:

•  The price cut below the 100-day MA;  
•  A bear flag formed with a target price below  S$ 5.00

Fortunately,   the 100-day and 200-day are still rising.  This will give hope that SembCorp's price might have a chance to reverse its course if the prevailing condition is favorable.

Click to enlarge the picture
Figure 1

What about the Prevailing Conditions?

Unfortunately,  the prevailing conditions are not able to support SembCorp's price at the moment.  Let's examine the various relevant indexes that can support the rise of SembCorp's price.  

a)   The STI & The MSCI Singapore

Click to enlarge the picture
Figure 2

Both the STI and MSCI Singapore indexes are littered with a lot of dead crosses.  It is not hopeful that they can lend any support to push SembCorp's price up in the shorter term.

Trading Economics has a forecast that the STI index will fall to 3.124 by the end of 2023

Figure 3

The Global Indexes

The US and Hong Kong markets used to have a lot of influence on Singapore's stock price but lately, the Hong Kong market was in a mess and the US market has begun to soften,  ready to make further corrections.  For example, the Dow Jones Industrial Index (DJI) has made 2 straight falls in the last 2 days.  It is ready to form a bear flag as shown in the following chart.  DOW has also started to make the first dead cross with the 20-day MA already crossing the 50-day MA.  We will expect DOW to make lower lows with the present setup.

Figure 4

Conclusion

Given the above,  we are expecting SembCorp's price to drop further to test not only Support  S3 @ S$ 5.01 but also Support S4 @ S$ 4.86 as shown in Figure 1 above.    If these 2 supports cannot hold the fall,  the price might test the bear flag target price @ S$ 4.58 which happened to be also the Support S5. 

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.