Executive Summary

After weeks of turbulence, Singapore Airlines (SIA) may be preparing for its next big flight. The recent sell down shook out the weak hands, but prices have now found solid ground at the $6.40 – $6.50 support zone. With buyers stepping back in and the 1GT (Pro) Indicator primed for a new bullish signal, momentum is quietly building beneath the surface. A break above $6.65 could be the spark that reignites SIA’s uptrend, with the $7.00 level once again in sight.

The story doesn’t stop at the charts. In July, SIA reported a 9.7% surge in passenger traffic, with load factors hitting an impressive 88.5%. Scoot posted record highs, and even with Singapore’s trade balance softening and the broader market facing headwinds, SIA’s fundamentals remain a tailwind. The question now: is this just a short-term bounce, or the start of another powerful rally? Traders shouldn’t wait on the runway, this could be the moment to fasten your seatbelts for SIA’s next takeoff.

Singapore Airlines Ltd (SGX: C6L) is one of Asia’s leading full-service carriers, well-regarded for its strong premium passenger base, resilient travel demand, and robust operational fundamentals.

Over the past few years, the stock has gone through periods of turbulence and consolidation, but its long-term chart continues to attract attention from traders seeking to capture trending opportunities.

Looking at the broader picture, the long-term trend for SIA remains constructive.

Prices continue to hold above the 200-day moving average (blue line), which signals that the longer-term uptrend remains intact despite the recent retracement.

This provides a foundation for buyers to re-enter the market should momentum return.

The 100-day moving average (red line) has started to flatten out, however, as long as these two longer-term moving averages hold, the bigger picture remains bullish.

In the near term, however, we saw a 1GT Bearish signal trigger in late July, which coincided with profit-taking after the strong rally, leading to a pullback as sellers dominated, bringing prices lower.

That said, buyers have since returned around the $6.40 - $6.50 support zone, with the stock holding firm at this level.

This is now a key near-term floor to watch, if it continues to hold, we could see momentum gradually shifting back to the upside.

The immediate resistance is at $6.65, where prices are currently testing.

A breakout above this level with any new 1GT Bullish signal, would suggest that short-term bullish momentum is resuming, potentially leading the reversal towards the next upside target at the $7.00 resistance, validating a new uptrend formation.

A conservative entry could be to accumulate on dips near the $6.40 – $6.50 support area, with a stop-loss slightly below $6.40 to protect against downside risk.

While a more aggressive entry could be to enter on a confirmed breakout above $6.65, riding momentum toward the $7.00 resistance as the next key target.

So, how does one take a position in SIA to ride the uptrend further with lower initial capital outlay?

Investors who wish to be exposed to potential upside moves in SIA shares can consider using call warrant such as XFHW to magnify the share price return using lesser capital and without the risk of margin calls, while those who believe that SIA shares will head lower from current levels can consider trending SIA put warrant OOYW.

Macquarie has a tool known as the Simulator Exposure to help investors estimate their investment and returns with warrants versus the underlying share, as well as the maximum holding period if one were to purchase the warrant.

Using the example of an investor bullish on SIA shares above the resistance level of $6.65, an investor will have to spend $66,600 (before trading costs) if he/she were to buy 10,000 units of SIA shares at $6.66.

However, if one were to use trending SIA call warrant XFHW to participate in SIA’s further share price upside, the investor will need only to invest $9,380 to buy ~293,100 units of this SIA warrant to achieve the same level of exposure.

This is because, SIA call warrant XFHW has an effective gearing level of 7.1 times (at the point of using the tool) and will move approximately 7.1 times more than SIA shares, and costs only $0.032 versus SIA’s $6.66 share price on 22 Aug.

Exposure Simulator: type in number of shares you would buy to see the equivalent amount of warrant investment in chosen warrant to achieve the same level of stock exposure

Entering the target exit level of $7 under the “Target exit” column, which is 5.1% higher than the stock entry price, and moving the number of days the warrant is held to say five days later on 27 Aug, you will observe that the warrant will now increase by more than 7 times i.e. +37.5% to $0.044.

This translates to a projected absolute dollar gain of $3,518 versus the $3,400 gain if one were to buy 10,000 units of SIA shares on 22 Aug instead.

Exposure Simulator: type in the target exit/profit-taking level and increase the number of days held to simulate the expected returns on the warrant versus holding SIA shares

The longer SIA shares take to rise to the target $7 exit level, the more the warrant holding cost will set in to erode the geared return of the warrant.

For example, if SIA took two weeks or 14 days instead to reach $7, the call warrant will now only increase 28.1% to $0.041.

The absolute dollar gain of the warrant will now be lesser than if one were to hold onto SIA shares, although the percentage gain is still 5.6 times more.

Warrants will see lower geared returns with longer holding periods. Increase the holding period to see the maximum holding period one should hold onto the warrant for

To know how long one can hold onto this SIA warrant for based on the $7 exit level, increase the holding period to the point where the warrant no longer makes geared returns versus the stock i.e. 42 days where the warrant will see only a 6.2% gain compared to SIA’s 5.1% gain.

If SIA is trading less than $7 in 42 days, a warrant investor who bought this warrant should consider cutting his/her losses anyway.

Investors should note that leverage works both ways. Whilst warrants can be used to magnified one’s exposure and potential gains from favorable price moves in the underlying shares, losses can also be magnified when the price moves against the investor. 

Additionally, using a SIA call warrant will only allow you to participate in the share price move, and is not equivalent to investing and holding the shares directly.

The sharing on how one can take a position using warrants has been contributed by Macquarie Warrants Singapore who is the issuer of these warrants listed on SGX.

About the Author - Joey Choy

Joey is Singapore’s renowned mentor on how to make an income by trading the stock market, an author and one of the most-watched, quoted and followed stock trading trainers in Singapore. Over the years, he has conducted numerous full house seminars, enriching thousands to trade more profitably. 

Joey’s come back story from a S$740k debt has been featured in the Business Times and inspired thousands in Singapore. In less than 3 years, he is highly regarded as one of the Top Tier Remisiers (Stock Brokers) and Traders, bagging numerous yearly awards like Top Trading Representative and Top CFD Achiever every year from 2014 to 2023 in Phillip Securities.

More about Joey here

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