2013 Singapore Stock Market opening : Correction Expected

The Straits Times Index (STI) has risen by a quite a fair bit towards the close of the year and I would not expect much reversal in the trend until the stock market reopens on the 2nd January 2013.

The past few years have shown a reversal of the STI index price trend at the opening of the year. If it has been falling before mid December, it will continue to do so until the end of the year and the correction will start from the 1st trading day of the new year. The reverse holds true.

The rationale for this is because most of the big players in the market, namely the banks and funds are having their end of year holidays. The big traders are either away on holiday or in the mood for party. Few would be making big changes to their current positions. It has been an unspoken rule in wall street and among the major markets traders. The Singapore Stock market is likewise following this trend.

If you been tracking the movement of the STI for the last few trading days, you would have notice that while the index continues to climb, the volume have been falling.

So if you are holding any STI component stocks which you are not intending to hold for the long term, then it is time to look at your portfolio and offload them at a good profit. You can always buy back at a lower price when the correction comes. If you are not holding any counter at the moment and wish to take advantage of the trend reversal, you can trade forex as it is illegal in Singapore to be short-selling(selling stocks which you do not hold). Once you have put in your short position for the STI, you can hold it for at least one month as the index is expected to correct for 1-2 months. Nevertheless, the Singapore stock market is much affected by global events and other major markets. You have to keep in mind several key events coming up and adjust your trading strategy accordingly.

Key Events/issues Coming up:
– US fiscal Cliff resolution
– Tension in East Asia
– Debt ratings of Euro Countries

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