Sunday, July 31, 2016

STI Bearish Divergence - More falls on the way

The recent week was bad with gloomy news all over the places...
From increasing unemployment 2Q16, to Swiber going from liquidation to judicial management (both are bad); not to mention California Fitness closing with alot of people's monies gone from those "good deal" yearly plans that were so actively sold.
No amount of Small Claims Tribunal, Lemon's Law etc. could help in this, when a business cease; unless in the rare incidents when there still cash left after paying all the bills, salaries, then there could be some refunds/return to consumers...

Some value buyers might think these are all one-time incidents only, and eager to catch some value stocks, blue chips etc.that have rose from its bottom in Feb-Mar 16, until cheap become cheaper.
Beware of falling knives!

My advice here is do not buy yet, not this week, not next week, not even the entire August.
Why?

Below is the weekly Chart that I've captured from LTS-ChartNexus software.

If you notice, our STI index rose above 2950 only to come crashing down the past week.
Some optimistic analysts celebrates, because they cited STI still posted a gain in July 16 & predicts STI will soon rise again after retracement to its EMAs.

Me? I don't think so.

If you look carefully, STI hit the resistance, where it previously hit in the week (25-29 Apr 16) but came down. While one may argue the setup is still bullish, due to the higher low twice hit in the week (9-13 May 16) and (27 Jun - 1 Jul 16), this is not a bullish trend.

2 Indicators were shown, one is Force index which measures strengths of the bull (rise) via volume and price increase; the other is MACD, its histograms measures the differences between 12 and 26 moving averages (the default settings), a rising histogram means its fast rising (thus the diverging fast 12 and slow 26 moving averages).

Basically both shows a lower peak versus the previous, thus this fall is likely to hit 2700 & possibly even lower. In a extreme bearish case, it might go close to retest Feb 16's low of 2540, but my gut feel is it will be between 2540 & 2690, a final stab before a true bull run.

It could be similar to the earlier box I've drawn, but don't expect the same; history rhyme but seldom repeats.

Good Luck Training! May the trend be with you ;)


Sunday, July 10, 2016

Transferring monies from CPF-OA to CPF-SA

It has been on my mind for quite sometimes...especially after reading blogs by ASSI & a couple of others; I finally decided to follow suit.

On 23 Jun 16, I transferred $23,265.74 from my CPF Ordinary Account (OA) 2.5%pa to CPF Special Account (SA) 4%pa, topping up my SA to $50,000, at age 31.

Then on 3 July 16, I transferred another $50,000 from my CPF Ordinary Account (OA) to Special Account, topping it to $100,000! Leaving aside $28,308.10 in CPF OA for about 17.5 months of mortgage payment. 
Should I decide to buy HDB BTO, I would have 2 years to save up, increasing OA to $65K before TOP (est.$900 x 30mths incl.bonus).
If I top up $7K with cash each yr, that would result in close to $80K, lasting 50mths/4years assuming same $900 CPF contribution (for a $2,500monthly mortgage or $569K loan in 25years@2.35%)



Do note that the transfer is irreversible!

Some Pros & Cons I personally felt:

Pros
  • Benefit from the "risk free" higher 4% compounding interests rate
    • Instead of using CPF OA to buy property where 2.6%-4% compounding interests work against you, transfer monies that are not needed in near future (2-3years) over.
    • If you can set enough minimum sum now in CPF-SA you essentially accomplish your retirement planning as CPF interest kept pace with market interest rates but higher!
      This means the interests earned in CPF-SA would more or less keep pace with the minimum sum increase year on year.
    • Finally any excess above the minimum sum amount, at the end of the day, is still available for withdrawal when one hit retirement age, so why not take action for it now?
  • In the event if you do need to use CPF-OA to help with property purchase, most HDB BTO or Exec.Condo launch takes 2-3years to build, you can always use the time to save up.
  • Following my own calculations, my CPF contributions would be sufficient to handle my mortgage payments for 17.5 months if I stop work or 50months if I continue to work with voluntary contributions top up each year
Cons
  • Amount available for CPF Investment scheme, dropped from initial $30K to $8K after OA-SA transfer
    • This limits the growth of my CPF to contributions, as I have lesser to invest now
  • Monies are locked away for retirement, and one must set aside take home income to pay for mortgage payment
  • CPF policies are subject to changes, and we rely on prudent management by CPF of our funds for withdrawal when we retire
  • Should government one day change or mismanage the country, hyperinflation & depreciation in currency would destroy the savings in CPF!

Reflection n Goals in New Year 2023

 Hi everyone, I've made my first YouTube post in 2023, do check it out...