SiMSCI and the meaning of this 7-year resistance

If this 7-year resistance in SiMSCI is not broken, it could be here to stay. Investors could exit quickly on any bearish sign. They could decide quickly that it is more worthwhile to trade a well established range than to challenge a significant resistance with a buy-and-hold strategy.


Singapore stock market hasn’t gone anywhere in last 8 years

Compared to last year’s performance, Singapore’s stock market performance in 2017 based on SiMSCI in this chart is remarkable. If we look over a duration of 8 years, then the index hasn’t achieved much.

Compare to new all-time highs achieved by Western indices, this qualifies for underperformance or even weakness.

Some studies suggest that a stock market’s lifecycle is somewhere between 7 – 8 years. If the best a stock market could do in an entire lifecycle is to move sideway, I guess it even qualifies to be described as a ‘lost generation’.

SiMSCI weekly chart from 2007 to present

SiMSCI weekly chart from 2007 to present

There is now slightly over 1 month left to go before the end of the year. SiMSCI could well use the remaining time to deliver a ‘real break’. Failure to close above by 30 December 2017, combined with a shift to bearish market sentiment for any reason, could convince investors that the resistance is here to stay and time to step away.

Consider these strategies:

  1. Break resistance, carry on with buy-and-hold.
  2. Don’t break (resistance is valid), buy-sell within range.
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