Fixed income strategy: SSBs or T-bills? My plan.

I know I said I was going to take a break from blogging until end of the month before I blog about my passive income for 1Q 2023. 

However, my OCD grabbed me again, and this is an update on what I am doing in the fixed income space.  

Yields fell along the entire yield curve with the Fed's 0.25% interest rate hike decision recently.

It was lower than the 0.5% which Mr. Market thought the Fed would implement before the banking crisis unfolded earlier this month.

The Fed chose to defend financial stability with a smaller interest rate hike than to fight inflation with a bigger rate hike.

Mr. Market interpreted that decision by the Fed as relatively dovish. 

Apparently, Mr. Market is pricing in interest rate cuts to happen before the year ends.

This is despite Jerome Powell's statement that there would be no interest rate cut this year.

Well, Mr. Market's argument seems to be that if the U.S. economy goes into a recession later in the year, the Fed would have to cut interest rate.

Who is going to blink first?

Mr. Market or Mr. Powell?

Your guess is as good as mine.

The 6 months T-bill auction here in mid March saw cut-off yield declining to 3.65% p.a. from the 3.98% p.a. we saw in the early March auction.

So, what are my thoughts?

I am also expecting the U.S. economy to weaken and possibly go into recession before the end of the year.

In such an instance, yields are more than likely to decline.

So, if I can get some longer duration bonds with relatively attractive yields now, I think I should do it.

Instead of putting in a bid for the 6 months T-bill auction happening at the end of March with some incoming dividends, I have increased the size of my application for Singapore Savings Bond.

The Singapore Savings Bond offered in the month of March has a 3.15% p.a. 10 year average yield which is higher than the 3% p.a. average interest rate from the CPF for my age.

I am really not increasing allocation to fixed income here but diverting some funds which otherwise would have been earmarked for CPF voluntary contribution in 2024.

To reiterate, if Mr. Market is right and if the Fed is close to the end of their tightening cycle in the USA, then, there is more downside risk for yields, which are already on their way down. 

In such a situation, if we want to have some fixed income exposure, we might want to lock in higher yields in longer duration risk free and volatility free Singapore Savings Bonds while they are still available.

This is especially if I could get a higher return than what the CPF offers me.

Even with a lower yield, I am aware that the 6 months T-bill would probably give a higher than 3.15% p.a. cut-off yield.

However, given the outlook, my desire to lock in a higher yield for a longer duration outweighs my desire for a higher yield in the short term in this instance.

There is also reinvestment risk with the 6 months T-bill as yields could be substantially lower 6 months later if Mr. Market is right.

Having said this, I would most probably resume bidding for 6 months T-bill in April, especially if the 10 year average yield for Singapore Savings Bond falls below 3% p.a. 

This is a reasonable expectation with yields softening at all points on the yield curve.

6 months T-bill is still a viable option for excess cash which we would like to put to work in the short term.

However, if the 10 year average yield of Singapore Savings Bond were to fall below 3% p.a., I would be better off doing voluntary contribution to my CPF account for exposure to longer duration bonds.

It is good to know that, in case yields continue to decline, voluntary contribution to CPF remains a viable option for someone like me who wants to maintain a meaningful exposure to fixed income in his investment portfolio.

There is no hurry to do voluntary contribution to CPF since we are many months away from the end of the year.

Will see what the Singapore Savings Bonds offer in the next few months.

What I do in April in the fixed income space will depend on the what the Singapore Savings Bond offers.

If you are also interested in this month's Singapore Savings Bond offer, remember to apply by 28 March 2023.

Recently published:
Learn how to become a millionaire.
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Learn how to become a millionaire! DBS, OCBC & UOB FTW!

I have been quite prolific recently as a blogger.

The month of March is coming to an end soon, and with it, 1Q 2023.

Will be talking to myself about my 1Q 2023 passive income very soon.

Before that happens, I will be taking the next few days off from blogging.

If you enjoy my blogs, not to worry. 

I have scheduled a few YouTube videos to be released on a daily basis.

So, in place of my blogs, you can still eavesdrop, literally, as I talk to myself on YouTube.

If you want timely notifications, remember to subscribe to my YouTube channel.

It is a free service.

Here, I will share two YouTube videos which I released recently.

They are both very short and do not require watching, just like all my other YouTube videos.

You only have to listen.

So, close your eyes and give them some rest.

The first video is very personal.

It is basically a glimpse into my past, and if you don't like this type of content, you can skip it.

The second one has quite a few numbers being thrown around but it really isn't that profound.

I just want to show that anyone can be a millionaire by investing for income.

Yes, if AK can do it, so can you!

Till my next blog, stiff upper lip and soldier on!

The sky is not falling!

Ticketing for "Evening with AK and friends 2023" is ongoing.

A fortnight of banking crises and what did I learn?

Three signs of a banking crisis.

First is credit risk.

This is when loans turn bad and debtors are unable to make repayments.

Other assets can also turn bad and are unable to generate income required to make loan repayments.

We could see this playing out in the U.S. commercial real estate sector.

It also means it will be harder for certain borrowers to access credit.

Refinancing also becomes difficult as banks become more selective and risk averse.

Credit will tighten significantly as there will be heightened scrutiny of borrowers' credit worthiness.

Second is liquidity risk. 

We might see withdrawals by depositors exceeding the available funds held by the banks.

This could lead to panic and runs on banks.

We saw this happened to Silicon Valley Bank in the U.S.A.

Later on, we also saw depositors withdrawing large amounts from First Republic Bank.

Even the $30 billion infusion provided by 11 big U.S. banks was insufficient.

Both S&P and Moody's downgraded First Republic Bank to junk.

Third is interest rate risk. 

Rising interest rates reduce the value of long duration bonds held by banks.

This leads to weaker balance sheets.

In case many depositors need to make large withdrawals at the same time, banks might be forced to realize those losses by liquidating these long duration bonds.

Funding cost for banks can also rise further as they pay more to their depositors.

Funding cost could, in some instances, be higher than what banks receive in interest payments. 

This could be the case if many long term loans on fixed rates were taken by the banks' customers before the interest rate hikes.

What is a systemic banking crisis?

A systemic banking crisis occurs when a large number of banks in a country have solvency or liquidity problems.

It could happen because of external shocks or because failure in one bank or a group of banks spreads to other banks in the system.

So, this explains why the U.S. regulators took over Silicon Valley Bank and Signature Bank very quickly.

It also explains why they moved to guarantee all deposits, even those larger than $250,000 insured under the F.D.I.C.

It was to prevent the failure of these two banks to spread to other banks in the system although in so doing, the U.S. regulators created a moral hazard as bad actors are not punished but bailed out.

Systemic banking crises are financial nightmares. 

These crises often result in deep recessions for the countries concerned.

This is because banking crises usually affect consumer and business confidence.

Spending, investing and lending on all fronts reduce because of extreme fear.

Banking crises in major economies could also spread to other countries, resulting in a global banking crisis.

This is called a contagion.

This is why the Swiss authorities assigned partial blame for the collapse of Credit Suisse to the recent U.S. banking crisis.

After all, often, it is a crisis of confidence arising from heightened fear that is more damaging to the banking system and economy than any other crisis.

We could yet see Mr. Market going into another depression as an economic recession looks more likely now than ever to hit the U.S.A. in the not too distant future.

Recently published:
DBS, OCBC and UOB test supports. Bitcoin to $1m a coin?

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DBS, OCBC & UOB test supports? Bitcoin at $1m! UBS buys Credit Suisse! First Republic Bank downgraded to junk!

The headlines which grabbed my attention this morning were two.

First, that Credit Suisse would be purchased by its Swiss rival, UBS, for 3 billion Swiss Francs.

Second, that S&P downgraded First Republic Bank further into junk as the US$30 billion infusion by a consortium of largest U.S. banks was deemed insufficient.

It seems to me that the banking crisis is still an evolving story.

In Singapore, fundamentally, our local lenders are financially sound and the Monetary Authority of Singapore has issued statements to say that DBS, OCBC and UOB are well capitalized and have little exposure to Credit Suisse.

Although I believe that weakness in the stock prices of DBS, OCBC and UOB is an opportunity for long term investors to accumulate, I am going to keep some powder dry.

From a technical analyst's perspective, the downside risk is pretty real, and Mr. Market's negative sentiment towards the banking sector could see stock prices of DBS, OCBC and UOB testing their immediate supports.

This is because Mr. Market can be pretty irrational at times and has thrown the baby out with the bathwater many times before.

We could see supports breaking then.

During times like that, when buying opportunities with potentially better future returns present themselves, we would appreciate having a war chest ready.

OK, I will stop telling horror stories about banks for now and move on to something which might be a bit more cheerful for some people.

What is it?

A piece of news which didn't quite grab my attention but was at the back of my mind had to do with a cryptocurrency, Bitcoin.

What's cheerful about Bitcoin?

The ex-CTO of Coinbase, Balaji Srinivasan, predicts that Bitcoin will hit US$1 million per coin by the middle of June 2023!

What?

OMG!

You so stunned like vegetable?

You are not alone.

He says that there will be hyperinflation in the U.S.A. as the US$ will see its value, which has been declining, ultimately destroyed.

We are seeing challenges to the US$ in many countries as major economies like China and India have been getting their trading partners to use the Chinese Yuan and the Indian Rupee respectively as their currencies of choice.

The rapid hikes in interest rates in the U.S.A. also means that the country's debt servicing burden has risen dramatically.

The Fed has not been able to contribute to the government coffers because of this and instead the U.S. Treasury is being drained at a frightening pace.

The U.S.A. is, in fact, bankrupt.

To avoid a default, the U.S.A. has to take on even more debt which is why the debt ceiling has to be raised by Congress.

If it sounds like a PONZI scheme to you, it is because it sounds like a PONZI scheme.

Bitcoin's price is rocketing higher in response to this development, it seems.

The banking crisis has further accentuated a critical flaw of fiat currencies and how they can be produced at will by central banks.

This is a very scary situation and as long as the can continues to be kicked down the road, all seems OK but is it really OK?

This is one reason why I changed my opinion about Bitcoin sometime in the middle of last year.

I explained in a blog many months ago I chose to buy some Bitcoin over Ethereum because of Bitcoin's status as digital gold.

Like gold, Bitcoin's supply is limited.

I bought another small fraction of a Bitcoin when its price dropped to its long term support last year.

Yes, I hold some Bitcoin like I hold some physical gold.

Bitcoin and gold are currencies, and like all currencies, they can be traded.

However, my purpose is not to trade Bitcoin and gold.

I look at them as insurance against flawed fiat currencies. 

I believe in having insurance as I always have a crisis mentality.

Anyway, in case you missed those blogs or if you are interested in a refresher, they are linked in the references below.

We are living in very turbulent times and we can only do what we feel is right to have some peace of mind.

Recently published:
Building my investment in OCBC took many years!

Ticketing for "Evening with AK and friends 2023" is ongoing.

References:
1. Gold, silver and Bitcoin.
2. Bitcoin at long term support.

Building my investment in OCBC took many years. Gambatte!

As a new trading week is about to start, I am reminding myself not to be affected by Mr. Market's mood swings.

I am reminding myself that as an investor for income, my investment portfolio looks to be in a good place.

My businesses should continue to generate meaningful income for me.

I should not have to worry about daily fluctuations in stock prices.

As an example, it took me many years to build my position in OCBC which, today, is my largest investment in the Singapore stock market.

This is the latest video by AK Production House which should have an uplifting effect.

I hope that anyone who might be eavesdropping would feel encouraged after listening to the recording too.

Investing for income isn't sexy.

It isn't a good fit for people who want to get rich quick.

However, it is a steady way to build wealth.

If AK can do it, so can you!

Recently published:
Fear is palpable! Market crashing?

Ticketing for "Evening with AK and friends 2023" is ongoing.

Other recent YouTube videos by AK Production House:

Fear is palpable! Market crashing again? Reminders.

The week started with the shutting down of Silicon Valley Bank and Signature Bank by U.S. regulators.

The U.S. regulators announced measures which ultimately bailed out the banks.

Then, we saw Credit Suisse reporting "material weaknesses" and the Swiss National Bank stepping in to backstop the troubled bank.

Credit Suisse took a 50 billion Swiss Francs loan from the Swiss National Bank to strengthen liquidity.

Then, a consortium of 11 largest U.S. banks rescued First Republic Bank, the 13th largest bank in the U.S.A., by jointly depositing US$30 billion in the troubled bank.

After all that happened, Mr. Market ended the week with a dramatic down day in the U.S. stock market on Friday.

The Fed increased interest rate a year ago in March 2022 for the first time since 2018. 

Since then, the rapid rate at which interest rates have been increased has caused a lot of pain for homeowners as well as investors in the real estate space.

The pain is most keenly felt in the high growth but negative earnings tech space and if you are a tech investor, you know this firsthand.

The people who said that something would break under the growing pressure of such rapid rate hikes are now looking rather prescient.

What would they say now?

Not surprisingly, that things will continue breaking as long as the Fed continues to hike interest rates.

With the ECB having hiked interest rates in the EU by another half a percentage point, the Fed is probably going to hike interest rates in the U.S. next week too as they stick to their plan to fight sticky inflation.

Mr. Market, already jittery, while initially assured by the show of solidarity in the U.S. banking industry, became depressed again on Friday when First Republic Bank suspended dividends.

In an environment where depositors could lose their savings and where investors in both stocks and bonds are losing money, heightened volatility in the stock market is unsurprising.

Fear is palpable.

It drives Mr. Market into self-preservation mode.

If the confidence deficit continues, then, more money could flow to the perceived safety of U.S. government bonds, and we could see yields lower.

During the COVID-19 pandemic, I blogged about how I was worried because my passive income was reduced due to my businesses either suspending or reducing dividends.

My relatively high level of CPF savings was the only "investment" that continued to pay what I expected it to pay, uninterrupted, which highlighted to me the importance of having an allocation to high quality fixed income in any portfolio.

So, I can understand Mr. Market's negative reaction to First Republic Banks's decision.

Many people depend on dividends for a living or to at least fund part of their expenses.

The still troubled bank saw its stock price recovering from a day ago on Thursday only to see it plunging 32% on Friday.

When the bear comes out of its cave, none is spared, and we saw the stock prices of large U.S. banks beaten down too as even JP Morgan saw a 3.78% decline in its stock price.

When Mr. Market is gripped by fear, he becomes irrational, and the baby gets thrown out with the bathwater.

As U.S.A. is still the largest economy in the world, what happens there often spreads to the global markets.

So, we could see Asian markets echoing that fear in the U.S. stock market.

I have said many times before that we cannot predict what will happen but if we are prepared, we need not worry and we could instead benefit.

Don't be overly pessimistic.

Don't be overly optimistic.

Be pragmatic.

This week, I was on steroids. 

I have published too many blogs regarding the stock market and what my plan might be.

So, if this is your first visit in as long a time, you will have a lot to read.

Have a good weekend.

Recently published:
US$30b rescue! T-bills 3.65%! Banks or REITs?

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US$30b rescue! T-bill 3.65% p.a.! Banks or REITs? Good?

I am not feeling too good today.

So, if this blog feels a little incoherent, you know why.

I have so many things flying around in my mind now. 

I just need to deposit them here in my blog, my Pensieve.

So, it seems that the U.S. banking crisis is contained once again with eleven big U.S. banks pledging $30billion to First Republic Bank.

This is a significant move to shore up confidence in the U.S. banking system as the individual sums of $1billion to $5billion in deposit are, obviously, uninsured by the F.D.I.C.

It is pretty impressive as it should be quite obvious to anyone that the U.S. Fed is unable to fight high inflation and to bail out the U.S. banking system at the same time.

Choosing to hike interest rate to fight inflation would increase the fallout risk in the banking system while not hiking interest rate might result in higher inflation.

The $30billion joint deposit made to First Republic Bank did not happen because the largest banks in U.S.A. decided all at once that it was in their industry's best interest.

The CEO of J.P. Morgan, the largest bank in U.S.A., Jamie Dimon, together with Jerome Powell and the Treasury secretary, Janet Yellen, seeded the idea. 

Jamie Dimon approached his peers and the $30billion package was born.

So, with the banking crisis contained once more, the Fed will be able to hike interest rate next week with one less thing to worry about. 

This move will follow the ECB, which just hiked interest rate by 0.5% to fight inflation in the EU.

Bond yields sank for many days in a row, because Mr. Market was betting on the Fed choosing to manage the risk of further fallout in the U.S. banking sector rather than to continue hiking interest rate to fight inflation.

There was also a flight to safety as Mr. Market moved money to the relative safety of treasuries.

With the Fed likely to hike interest rate as planned, investors in Singapore should see yield on the short end of the curve rising again. 

So, we should see 6 months T-bill yield going higher from the relatively low cut-off yield of 3.65% per annum we saw in the 16th March auction.

As for DBS, OCBC and UOB, the Monetary Authority of Singapore has issued a statement to say that the exposure which DBS, OCBC and UOB have to troubled Credit Suisse is “insignificant”.

I am staying invested in DBS, OCBC and UOB for income as I expect them to continue to bring home the bacon. 

With higher dividends declared, I look forward to getting bigger portions in future too.

What about REITs?

In the current environment, U.S. banks are going to be more selective and risk averse. 

So, I believe that it could be harder to secure loans or to refinance for some commercial properties in U.S.A. now.

So, I would avoid those U.S. REITs which have very high gearing and which need to refinance in the next 12 to 18 months.

Digital Core REIT, which is a data centre REIT, saw its unit price crashing because one of its largest tenants, Cyxtera, which accounts for 22% of its income has not been able to refinance a revolving credit facility that matures in Nov 2023. 

Moody's downgraded Cyxtera's credit rating to junk as it believes the possibility of default over the next few months is significant.

Only a couple of months ago, there was a chorus of BUY calls for Digital Core REIT by analysts and some finance social media influencers.

It pays to remember not to ask barbers if we need a haircut.

It pays to remember that no one cares more about our money than we do.

Eat crusty bread with ink slowly for peace of mind.

Recently published:
Banking crisis spreads! AK issues warning!

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Banking crisis spreads! AK issues warning!

This is a reply to a regular reader and active commentator, Garudadri.

I thought I should publish it as a blog to issue a warning to all readers.

Here goes.

To be quite honest, I am not rubbing my hands in gleeful anticipation of a greater market crash.

Apart from being aware of what a market crash means for many people, I am also a very lazy investor who would very much prefer to do nothing instead of having to do something.

By my own standards, last year was a rather active year for me as an investor, too active for my liking, and I was looking forward to a year of relative inactivity in 2023.

I think Warren Buffett would approve since he famously said that "inactivity strikes us as intelligent behavior."

Nothing would please me more than to see my businesses chugging along nicely and paying me reasonably well, year after year.

I agree with you that if we have the ability to hold long term, barring earth shattering changes to the banking landscape, all three of our local lenders  in Singapore should continue to do well even with all the speed bumps along the way.

So, if we have the resources and it is not difficult to find people with deeper pockets than mine, we could buy into DBS, OCBC and UOB now, especially if we don't have any exposure to them yet.

Especially so if we don't plan to look at stock prices regularly over the next few years.

"I would tell investors not to watch the market too closely." - Warren Buffett.

Of course, we have to remember that most of us don't have money gushing in all the time like Warren Buffett does.

He is in a class of his own.

As for the technical analyses (TA) on the stock prices of DBS, OCBC and UOB which I have shared recently in my blog, they are just something I enjoy doing from time to time.

I don't do as much TA as much as I used to many years ago when I was more active in the stock market as a trader.

So, I am probably pretty rusty.

This is why I decided to publish my reply to you as a blog to warn people to take their anti-tetanus jabs before looking at my TA.

AK is just talking to himself as usual.

Warning issued.

16 March 2023. 6 months T-bill cut-off yield lower at 3.65% p.a.

Source: T-bills March strategy. Comments section.

To read the blog in question and Garudadri's comment, go to:
DBS, OCBC and UOB: Higher or lower? My plan.

Red Alert! Latest content by AK Production House on the spreading banking crisis, exclusively on my YouTube channel:

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DBS, OCBC and UOB. Higher or lower? My plan.

No one can accuse AK of being lazy in the last few days.

I am feeling a little tired from looking at charts and following the news.

Been publishing blogs and producing videos too.

Thinking of taking a few days off from blogging but the OCD in me grabbed me.

For the sake of completeness, one more blog on DBS, OCBC and UOB.

Completeness?

Well, the TA I did yesterday which resulted in two blogs being published paid more attention to the bearish sentiment.

Today, we saw a nice bounce in the stock prices of all three local lenders.

Not to keep readers in suspense, a blog to explore the upside possibility will round things off nicely.

Then, for quite a while, I believe readers can use this blog and the last two blogs as references if they so wish.

So, let's start.

Like I said, the stock prices of all three local lenders had a nice bounce today.

Let us start with the strongest this time, OCBC.

Yesterday, I said OCBC exhibited the most resilience.

Today, the green spinning top delivered and OCBC's stock price broke resistance provided by the 200 days moving average.

That the stock price closed at $12.27 comfortably above the moving average which is at $12.14 is encouraging.

However, whether it will stay above this moving average in the next few sessions remains to be seen.

Volume is the fuel that drives a rally and because OCBC's stock price rose on relatively low volume today, there might not be a strong follow through.

Although a green candle formed today, it has a very long upper wick. 

This suggests that Mr. Market lacks conviction as the stock's closing price was a mere 3 cents higher than its opening price while the high of the day was 19 cents higher than the opening price.

If there should be weakness, we would probably see the 200 days moving average, the resistance turned support tested.

If that should break, then, the support levels identified in my previous blog would be next.

Moving on to DBS.

Just like OCBC, DBS saw much lower volume today compared to yesterday even as its stock price moved higher.

As expected, the 200 days moving average, currently at $33.16, remains the resistance to watch even though it is a green candle day.

The MFI suggests that DBS is just about to move out of oversold territory while the MACD suggests that momentum remains very much negative.

This suggests that buying interest could weaken tomorrow and it would be interesting to see if DBS could recapture the 200 days moving average as support.

If there should be more downside, then, the possibility of a move back to $30 a share which I blogged about yesterday is back in play.

Now, for UOB which I said yesterday had the weakest chart of the three.

Has this changed?

I was pleasantly surprised when I saw the resistance provided by the 200 days moving average taken out but it only lasted for a short period of time.

UOB's stock price eventually retreated to close only 3 cents above its opening price.

The 200 days moving average is, therefore, still the immediate resistance.

Volume today was very much lower than yesterday too.

So, it really isn't surprising that the push to move  the stock price much higher could not be sustained.

The green candle formed is similar to OCBC's as it has a very long upper wick which suggests a lack of conviction on Mr. Market's part.

The MFI suggests that UOB is no longer oversold and the MACD shows that momentum is still negative.

So, it is similar to DBS in this respect which suggests that buying interest could weaken tomorrow.

If prices should move lower, then, the longer term support I identified in yesterday's blog could be tested in due course.

What would I do in such an instance?

Before I continue, please keep in mind that this is what I will do given my circumstances.

We have different circumstances and, also, beliefs.

We should have our own plan even if we are presented with the same set of information.

It is clear to me that stock prices of DBS, OCBC and UOB are all trending down.

Some of us might remember the saying: "The trend is our friend."

Also, "Don't fight the trend."

As a retiree with limited resources, I would rather err on the side of caution.

There is also the fact that I already have a significant exposure to all three local lenders. 

So, I am in no hurry to add to my investments.

Technical analysis is mostly backward looking but it can give a glimpse of what might happen from time to time.

This is why I always look for divergences between stock prices and the momentum oscillators as divergences are forward looking.

Looking for divergences was also how I was able to tell that OCBC's stock price would be more resilient than DBS and UOBs'.

Remember to have a plan and it should be your own plan.

Related posts:
1. Buying OCBC.
2. More downside or reversal?
For anyone who is interested, ticketing for "Evening with AK and friends 2023" is ongoing.

DBS, OCBC and UOB: More downside or reversal?

Long time regular readers of my blogs know that I have been accumulating stocks of DBS, OCBC and UOB.

The last time I did this on a relatively significant scale was in October 2022.

Over a few days, I increased my investments in OCBC by 11% and UOB by 19%.

Then, the local lenders' stock prices rose and I ceased accumulation.

I like to think that I was not suffering from an anchoring effect as I simply refused to pay higher prices to increase my stakes.

I just didn't think I would be getting as much value for money at much higher prices.

I was adding to my investment in OCBC at almost book value and paying a 5% or so premium to UOB's book value in October 2022.

With the stocks selling off, it now seems that I might have a chance to accumulate at those levels again.

This is a realistic expectation as trading volume has expanded significantly as bearish sentiment took hold.

Of course, seasoned traders know that stock prices could simply drift lower on low volume but when there is high volume on down days, it adds fuel to the fire.

In this blog, I will talk to myself about where I think the stock prices of DBS, OCBC and UOB might be heading.

As I do this, I remind myself that technical analysis is about probability and not certainty.

I will start with what I feel is the weakest of the three, UOB.

Of the three banks, UOB is the only one to end the day with a red candle.

UOB's stock price started the day at $28.05 but closed at $27.84.

The bears are strong here and the flat 200 days moving average at $28.47 will probably be the resistance level to watch for now.

The MFI has entered oversold territory which might bring out some bargain hunters but with momentum deep in negative territory, it is unlikely that UOB would break resistance provided by the 200 days moving average.

I see the next significant support at around $26.90.

This is a many times tested support level which was also the resistance level in the month of October last year.

I feel that DBS's stock shares a similar fate to UOB's but it ended the day with a green candle which is a sign that the selling pressure here is better absorbed compared to UOB's case.

DBS opened at $31.70 but closed higher at $32.33.

Similar to UOB, the 200 days moving average at $33.15, previously the support, will now be the resistance to watch.

Just like UOB, DBS is now in oversold territory which could result in some bargain hunting.

We could see the gap filled at $32.70 in such a case but with momentum deep in negative territory, it is unlikely that resistance provided by the 200 days moving average could be overcome.

We could possibly see a retracement to $30.00 or so a share which was the support level seen in the months of June and July last year.

This is if the bearish sentiment continues to dominate.

So, that leaves us with OCBC which has exhibited the most resilience.

Even though the trading volume was much higher than the day before, a green spinning top, a reversal signal formed.

Now, a single candle reversal signal isn't very strong and it could very well fail.

Just like DBS and UOB, OCBC is now trading at below its 200 days moving average.

Unlike UOB's which has flatlined, OCBC's 200 days moving average, currently at $12.14, is still rising although gently.

The positive divergence in OCBC's chart which I mentioned in recent blogs on our local banks' price action is still visible.

If I were to join the the lowest points in July and October last year, we can see that OCBC's uptrend is still intact.

The trendline could provide immediate support which seems to be at $11.80 to $11.90 this week.

If that breaks, then, the uptrend is broken and we could see a retracement to various supports at $11.70, $11.50 and then $11.30.

These price levels have acted as important supports and resistance many times before.

Depending on which side of the fence we are on, the bear can be a friend or a foe.

If we have been doing the right things, the bear is our friend.

UPDATE:
More than 50% of tickets for "Evening with AK and friends 2023" have been sold. As expected, the tickets are selling at a slower pace this time.
Evening with AK and friends 2023. Ticketing.

Related post:
Buy OCBC. DBS and UOB next?

Buying OCBC. DBS and UOB next? Too big to fail!

Just a few days ago, I talked to myself about DBS, OCBC and UOB.

Specifically, I talked to myself about their charts.

Although fundamental analysis tells us that DBS, OCBC and UOB make for relatively safe investments, Mr. Market is mental and does not care about fundamentals at times.

This is why I said I would wait for Mr. Market to go into a depression before I increase my investments in DBS, OCBC and UOB.

Over the weekend, I produced four YouTube videos on the ongoing U.S. banking crisis.

This morning, in addition to a video on SATS' rights issue, I produced another video on the U.S. banking crisis.

Although the U.S. regulators have taken steps in an attempt to calm the public, we are still seeing a sell off in banking stocks.

Obviously, Mr. Market is not convinced that all is well.

Although Mr. Market is mental, conventional wisdom tells us that Mr. Market is always right, even when he is being irrational.

The market can stay irrational longer than we can stay solvent.

Remember that?

Despite a statement from the Monetary Authority of Singapore declaring that Singapore's banks are well capitalized, DBS, OCBC and UOBs' share prices are plunging.

Source: MAS

We could be seeing the proverbial blood in the streets as the common stocks of all three local lenders are now trading below their 200 days moving averages.

With the momentum oscillators negative and no sign of a positive divergence for DBS and UOB, I expect the stock prices of these two banks to suffer more than OCBC's.

OCBC is in a slightly better position as the MFI, a momentum oscillator which I favor, shows a higher low even as the stock price hits a lower low.

So, I placed an overnight BUY order for OCBC at under $12 a share and it was filled a few moments ago.

From a valuation perspective, OCBC is also a better buy than UOB or DBS as it trades at a very small premium of about 5% to its NAV.

Approximately, UOB trades at a 15% premium while DBS trades at a whopping 45% premium to NAV.

To be honest, I would not be surprised if stock prices continue falling from here.

Although I increased my investment in OCBC today, it is only a nibble and a very small one too.

The bearish sentiment is very strong right now and it is probably a bad idea to fight Mr. Market.

Too much dust in the air.

Still, the dust will settle at some point.

So, don't do a Chicken Little.

The sky is not falling.

I am staying invested in DBS, OCBC and UOB as they are unlikely to implode like Silicone Valley Bank did.

If the stock prices of DBS, OCBC and UOB continue to decline, better entry points should present themselves eventually.

I hope I would have the resources to add to my investments then.

Related post:
Buy DBS, OCBC and UOB?

Recently published:

Evening with AK and friends 2023.

Evening with AK and friends 2023. Ticketing!

This is a follow up blog on "Evening with AK and friends 2023."

As promised last Friday, for those who are interested, here is the ticketing link:

Buy your ticket for "Evening with AK and friends 2023" here.

AK is back!

14 March 2023, 2PM UPDATE.

Some of you might also be interested in the latest YouTube videos by AK Production House.

I was on steroids and produced many videos on the banking crisis in the U.S.A. and if DBS, OCBC and UOB could be affected.

I am now working on new videos regarding the SATS rights issue as well as the S.D.I.C. which insures up to $75,000 in banking deposit.

Remember to subscribe to my YouTube channel if you want to get free timely notifications.

DBS, OCBC and UOB crashed!

 

Interest income under pressure!!

 

Which bank is next to fail?

U.S. banking bailout!

To everyone who is coming to the event on 10 May 2023, please remember the reminders published in my previous blog on the event.

See you, if you are joining us, for an evening of fun and laughter (and some photo taking, of course!)

Related post with reminders:
Evening with AK 2023. Confirmed.
Recently published:
Singapore to split apart? Who to blame?