When the STI Ends Lower in May, it Often Slides Further in June

In this month of May, the STI has dropped from the close of 2838.52 at the end of April to a low of 2713.47 on 13 May.   After that, it slowly creeps up to close at 2791.06 today, the last day of the month of May.   At 2791.06, the STI has ended 47.46 points down for the month.

The daily chart of the STI for the month of May is shown below:

Figure 1.   STI daily chart for May 2016

 

Excluding this year, the STI has ended the month of May down 10 times since the year 2000.   It was down in the years 2000, 2001, 2002, 2004, 2006, 2010, 2011, 2012, 2013 and 2015.

Let's look at the STI daily charts of those years for the months of May and June.   They are shown in the figures below:

Figure 2.   STI daily chart for May - June 2000

 

Figure 3.   STI daily chart for May - June 2001

 

Figure 4.   STI daily chart for May - June 2002

 

Figure 5.   STI daily chart for May - June 2004

 

Figure 6.   STI daily chart for May - June 2006

Figure 7.   STI daily chart for May - June 2010

Figure 8.   STI daily chart for May - June 2011

Figure 9.   STI daily chart for May - June 2012

Figure 10.   STI daily chart for May - June 2013

Figure 11.   STI daily chart for May - June 2015

 

From the figures above, it can be seen that:

i)  There were 7 years in which the lowest point of the STI in June was below its lowest point in May.   The 7 years were 2001, 2002, 2006, 2011, 2012, 2013 and 2015 (Figures 3, 4, 6, 8, 9, 10 and 11 respectively).  

ii)  In the cases of 2001, 2006, 2011, 2012 and 2013 (Figures 3, 6, 8, 9 and 10 respectively), the STI subsequently found a bottom in June and thereafter retraced upwards.

iii)  However, in the years 2002 and 2015 (Figures 4 and 11 respectively), it simply continued to slide down in June right till the end of the month without finding a bottom.

iv)  On the other hand, in the 3 other years in 2000, 2004 and 2010 (Figures 2, 5 and 7 respectively), the bottoms it reached in May proved to be bases strong enough for it to bounce off and trend higher in June.   In the year 2000 (Figure 2), the bottom was reached only on the last trading day of May.
 

Hence, in 7 of the last 10 cases in which the STI had ended down in May, it continued to drift lower to bottom out or just trend lower without forming a trough at all in June.

Therefore, since the STI has ended down this May, based on past data, it is likely that it will fall in June and reach a level that is below its lowest point in May.

So, will the STI really follow what it did in previous years and slide lower this June?   Let's watch the developments.

 

12th Annual General Meeting of TH Heavy Engineering Bhd

I attended TH Heavy Engineering Bhd's 12th Annual General Meeting at the Tropicana Golf & Country Resort in Petaling Jaya, Selangor Darul Ehsan today as a proxy.  

The meeting commenced at 2:30pm and ended at about 3:30pm.

 

 

 

 

Refreshment was provided after the meeting.  

 

The food comprised 5 items and included the following (as recalled from my memory):

- seafood spaghetti aglio olio

- deep fried boneless chicken

- fried dim sum

- chicken pie

- assorted cakes.

I managed to try only 4 items.   By the time I reached the fried dim sum container, it was already empty.  

 

 

 

 

 

 

 

 

 

The STI has Made 10 Straight Days of Decline

The STI achieved an amazing feat on Friday.

 

It fell for the 10th consecutive trading day.

 

It started falling since 22 April when it was at 2960.78.   It closed at 2730.80 on Friday, making a total decline of 229.98 points or 7.8%.   The average drop per day was 23.00 points.   The RSI (14) indicator (Relative Strength Index) was at 15.9% on Friday. 

The STI daily chart from 20 April 2016 to 6 May 2016.

Record Streak?
 

Could this be the longest streak of consecutive daily decline for the STI?

 

Past data on the STI show that this is only the second longest streak since 1995.  

 

The longest streak occurred from 5-22 September 2000 in which the STI declined 14 consecutive trading days.   It fell 257.07 points, giving an average decline of 18.36 points per day.   In percentage terms, the total decline was 11.7%.   The RSI (14) indicator reached 0% on the last day of the decline.   It then staged a small rebound of 3.7%. 

The STI daily chart from 3 September 2000 to 25 September 2000.

 

Excluding the current, the next longest streak of consecutive daily decline lasted 8 trading days.   There were a total of 5 such cases since 1995.   2 cases occurred in both 1997 and 1998 and the remaining case happened in 2011.


Possible New Record?

 

Will this current streak of consecutive daily decline equal and then break the existing record of 14 days?  

 

For this current streak to match the existing record, the STI will have to drop in the first 4 days of next week.   If the current streak is to set a new record, the STI will then have to fall everyday next week.

 

It has dropped only about 100 points this month.   It still has ample room to fall if it decides to revisit its February low.

However, in its correction that started in January this year, when it reached about 2729 (which is very close to its value of 2730.80 now) on 7 January, it bounced up slightly the following day.  

Furthermore, it has already dropped 229.98 points this time.   Everyday now will be harder than the last for it to drop.

So, will the STI resume its drop next week in its quest to set a new record?   We will wait and see.

 

 

 

 



Portfolio as of 30 April 2016

The stocks that I have bought this year and which I am still holding as of 30 April 2016 are as follows:

Acromec
Ascendas Reit

Best World

CapitaCom Trust

CapitaMall Trust

CapitaR China Tr

DBS

Frasers Com Tr
Jumbo

Mapletree Com Tr

OCBC Bank

Q&M Dental

Sembcorp Ind
Sheng Siong

Singtel
SoilBuildBiz Reit

Starhub

UOB

Venture

All of them are counters on the Singapore Stock Exchange.

14th Annual General Meeting of Three-A Resources Bhd

I attended Three-A Resources Bhd's 14th Annual General Meeting at the Tropicana Golf & Country Resort in Petaling Jaya, Selangor Darul Ehsan today as a proxy.  

The meeting commenced at 11:00am and ended short and sweet at 11:40am.

Lunch was provided after the meeting.   The food was delicious.

It was a buffet spread with 13 different items.   The items included the following (as recalled from my memory):
- fried mee mamak
- Singapore fried mee hoon
- steamed rice
- chicken redang
- chicken teriyaki
- fried fish fillet with ginger and onion
- deep fried calamari
- fish fillet in thai sauce
- fried mixed vegetables
- steamed yam cake
- sardines curry
and 2 other items that have slipped my mind.

Dessert comprised 4 different types of fruits (rockmelon, pineapple, watermelon and honeydew melon) and red bean soup.

 

Food was plentiful and was still in abundance when I had finished and left with my stomach full.



 

How the STI may Perform in May 2016

The STI had ended April flat at 2838.52.   To be precise, it was down by 2.38 points.

Let's now take a look at how the STI may perform this May.


Methodology

2 methods will be used to predict the performance of the STI in May.   They are the monthly effect and the momentum effect methods.

In the monthly effect method, you look at the performances of the index in the same month during the past years for clues.   If the index often behaved in a particular way in the same month previously, then it might behave the same way again in the same month this year.

In the momentum effect method, you look at the performances of the index in one or more immediately preceding months of the current, check for similar occurrences in the past years and look at their immediately following months' performances for possible directions.

The results obtained from the 2 methods are then used to establish the probable performance of the index for the current month.


Data

The table below shows the month-on-month performances of the STI for the months of March, April and May in the last 20 years as well as those of March and April in 2016.

	March	April	May
1996	-51.20	28.40	-82.80
1997	-122.70	-68.70	61.20
1998	13.80	-135.80	-238.47
1999	106.40	367.88	17.67
2000	12.09	31.52	-368.98
2001	-273.21	48.53	-65.67
2002	87.64	-77.85	-53.53
2003	-6.03	13.51	67.67
2004	-29.71	-16.89	-53.37
2005	22.03	-16.18	36.52
2006	51.44	77.31	-226.84
2007	127.09	130.05	149.84
2008	-19.09	140.43	44.83
2009	105.12	220.29	408.80
2010	136.60	87.15	-222.01
2011	95.34	74.01	-19.93
2012	16.40	-31.89	-206.03
2013	38.15	60.08	-56.81
2014	77.84	76.09	31.14
2015	44.15	40.38	-95.28
2016	174.39	-2.38	?

Monthly effect

If you look at the data in the 'May' column in the table for the period from 2006 through 2015, you will see that the STI was down 6 times out of those 10 years.   Similarly, if you look at all the data in the whole in the 'May' column, you will also see that the STI made a loss 12 times out of 20.  

Thus, in both the last 10 and the last 20 years, you have the STI down 3 times out of 5 in the month of May.   This shows just how likely it is for the STI to go down in May.   The chances are consistent and have not changed between the last decade and the decade before that.  

Now, let's take a look at the times the STI posted a massive drop in May.  

You can see that there are 5 times in which the STI had dropped by more than 200 points in May.   They happened in the years 1998, 2000, 2006, 2010 and 2012.  

In case you have missed seeing it, take a look at the numbers of those years again.   Did you notice that all of them are even numbers?  

What do you have now?   This year is 2016.   It is also an even number.   So, you may have the STI making a huge drop this May!  

Since, in 20 years, you have 10 even-numbered years, the chances of a massive drop in the STI happening in an even-numbered year is 1 out of 2.   That means that the chances of this event happening or not happening this year are just the same.

The STI looks to have a good chance of going south this May and could even go down by as much as 200 plus points.


Momentum effect

In April this year, the STI had ended flat.   This was the only time in the past 20 years in which the index had ended flat in April.  

There were other years previously in which the change in April was small, but it had never been as small as this year.   In fact, in the whole of the past 20 years, there were only a total of 6 times in which the monthly change in the STI was less than 2.5 points.

Looking at the STI's performance in March, it had a gain of a massive 174.3 points.   However, it registered a small loss in April.   There was, thus, a swing from a substantial gain in one month to a loss in the next.   The upward momentum in March was not only diminished and extinguished, its direction was also reversed.   Such an enormous swing from one direction to the exact opposite direction indicates the fingerprints of some mighty forces.

Hence, let's take a closer look at this phenomenal behaviour.

In the table above, each row of cyan-green-coloured boxes highlights an occurrence of the STI switching from a gain in March to a loss in April.   There were 4 such occurrences in the past 20 years.

Look at the performances of the STI in May for those cases.   3 times out of 4, the STI had gone on to register a loss in May.   In 2 of the cases, the drop was more than 200 points.

A change in the direction from positive to negative of the STI from March to April had not really boded well for the STI in May.

This indicates that the STI may follow suit with a loss in May this year.


Summary

Now, you have both methods yielding results that point in the same direction.  

The results show that the STI looks more likely to go down this May than not.   If it does go down, a drop of over 200 points is also something that should not be unexpected.

So, will the STI really go down this May?   If it does, will it plunge by more than 200 points?

Let's watch how it pans out.