Merry Christmas

Merry Christmas

To everyone out there,

Merry Christmas to you and all at home.

May the spirit of Christmas bring to you

Family love

Peace and

Joy.

May also the spirit of Christmas bring

Less Earthquake (tsunami)

Better economic data

Less global tension

A resolution to European sovereign debts and

Global growth.

Again, Merry Christmas to all.

Take care and lots of blessed love.

Patrick SEE and family.

To expect the unexpected

(Posted Sunday, 530 pm)

The main point of this post is a discussion on expecting the unexpected. Look at how the market reacted when the unexpected were announced.

It is a no brainer. If we can expect the unexpected, all of us will be rich. The surprise last week were

·         the coordination of Central Bank actions AND

·         The 50 basis point cut in China’s RRR.

What’s even more surprising is that the news came together. This resulted in an even bigger rally.

The other recent occurrence was on Oct 26^th thereabout. The event were

·         The EU summit announcement of the Greek haircut, bank recapitalization and EFSF

·         The very favorable announcement of the Oct US GDP data

Again, the combination of two big news on a single day contributed to the HUGE rally in high yield assets, commodities, currencies and the equity markets. Though the Oct 26^th event did not really take off well, the markets did not test the support levels again (yet?).

Fortunately, the news was favorable. BUT what if the news were unfavorable and what if there were more than one bad news on s single day? To expect the unexpected and taking pro-active management before the event can certainly maintain or generate potential returns. (I believe that my posting before the markets melted late Q2 and early Q3 was of benefit to your portfolio!)

If you can contribute, thefinance.sg would certainly be the place to post your comments. Let’s bring our brains together and prosper! It will be alright if you remain anonymous, even better if you like to put a nickname!

Thinking out of the box by expecting the unexpected would certainly generate high potential returns but I am one, the audience is many!

 Happy investing and have a great weekend. The jungle warfare begins tomorrow when New Zealand opens at 2am Monday morning!

Did you miss an important post for November?

Commencing December 2011, I will try to post the articles that had received weak readership from the previous month. If the contents may be of interest, press the hyperlink to journey onto the right post!

The following were posted but received weak readership; what you may have missed 

Would the ECB/IMF theory become a probability ; a possible channel to solving the Euro debt crisis and hence solving the European debt crisis.

Global major indices close down for November ; Link to US economic and global calendars

The US dollar index ;A very important indicator that predicts rally and slumps

Dynamic risk profiling; The wrong assumption most investors make while completing the risk profiling questionnaire

Markets can stay more illogical than you can stay We all trade logically we still lose money. Why is that?

Are Asia Pacific equities impotent? Explains why Asian markets are different from US markets

YTD major benchmark performance 2011 Nov 11th This is useful if you were investing in Unit Trusts. The posts identify which markets are in correction or bear market territory.

Again, are we out of the bear market? Read comments!

(Posted Saturday, 6pm)

Let’s make this post a two way street. How about the audience providing some feedback on why you’re still skeptical about the recent rally and that we are still in a bear market?

The discussion is a two way communication. I am not here to prove who is right or wrong. The obvious judge will be time.

I’ll start of by presenting my opinion on why we are out of the bear market territory.

1. Let’s use the DJIA for discussion. Since October 4^th, the market has tested the 12,200 resistance level four times. Despite the Europe sovereign debt concerns, the support lows should be getting lower with increase concerns in Europe, right? But the (support) lows are getting higher with support level at 10,400 and 11,250.

2. Are you familiar with the Relative Strength Index (RSI) on DJIA? Did you notice what happened when the index breached 30 (the oversold level) on Nov 25^th? The US market (coincidentally) rallied on news of better Black Friday sales. I could be wrong but I don’t recall any financial provider discussing the DJIA being on the oversold index level!

3. The economic data from US, the world largest economy is generally better than expected lessening fears of a double dip recession. The latest being the unemployment rate dipping to 8.6% matching the lowest since March 2009 from 9%.

4. Emerging markets like Brazil, China, Indonesia and Thailand had lowered interest rates in their monthly Monetary Policy Meeting (MPM). This indicate that they are sending a clear message their support for global growth vs their fight again inflation. The lowering of interest rates makes borrowing cost lower thereby promoting growth!

5.Similarly, China, which is the world’s second largest economy, had lowered 50 basis point in their RRR; making borrowing cost lower in China. This is their pledge to support growth instead of fighting inflation.

6. The CBOE VIX (with a low high range of 25 - 45) has been at the 27-28 level for the last 2-3 days indicating speculator’s sentiment on lower volatility.

7. As you probably know that hopes and speculation move the market, the French, Italy and Spain bonds are yielding much lower than the unsustainable 7% level. Global investors are hoping of a favorable outcome of the EU summit on December 9^th.

8. Expect the unexpected.

The big surprise (last week) was the coordination of Central Bank actions to reduce the interest rate on dollar liquidity swap lines by 50 basis points.

9. More talk on the ECB/IMF channel to fight the European debt crisis primarily in Italy and Spain. In addition, tougher enforcement of budget rules by Germany and France to manage the Europe debt crisis in its 3^rd year.

I had post more than 8 points. Is this sufficient? How about some feedback through some comments?

Again are we out of the bear market? 

Next important data:

Watch out for Australia’s and Europe next MPM this coming Tuesday and Thursday. A widely expected 25 basis point cut would further support global growth. The initial knee jerk reaction is for the Aussie/Euro to drop 30 pips upon receiving the news. Otherwise, the Aussie/Euro would strengthen.

Response on comments by audience:

If you know me by now, I am the professional who never recommends what to buy or sell. However, I am the ears and eyes to inform the audience what is happening in the market (before the headlines!).

Why prices go up or why prices go down? I believe that without understand the price movement, the real reason why prices move, I will NOT be able to understand if prices proceed in the same trend or will it reverse.

As you also probably know by now, I have my basic indicators where I gather the sentiment of global investors and place it on the table for your decision making. I can’t recommend mainly because the audience have different

·         Time horizon; short, medium or long term

·         Investment objectives; shorten your mortgage, down payment for a property, build up your retirement fund, etc

·         Risk profile; static and dynamic, etc

As one comment from the audience asked, ‘should be buy now?’ without knowing your specific investment objectives, risk profiling, time horizon, etc I am just foolishly giving prescription without proper diagnosis. Hence,

Dear audience,

Please contact me if you have a specific question. Providing some background information would be helpful in my response.

Some grave mistakes if my (blind) recommendation were to go ahead and buy:

Buying a call option vs a put option.

Buying Eurusd vs Usdcad

Buying Audusd vs Gbpusd

Buying Jpyusd vs Us dollar index

Need I explain further?

French and Spanish bonds were well received, read comments!

Global growth concerns are less of a worry in Q4 as compared to previous quarters. While the US benchmark indices have rallied back towards the flat line, the European bond yield has kept investors on the edge.

If you’re investing or trading, one of the indicators you need to watch out for are the global sovereign bond yields. As of late, the French and Spanish bond sales were well received yesterday. The yields for France, Spanish and even Italy are below the sustainable 7%.

Have you been noticing the US dollar index lately? Since it tried to test the resistance level of 80, it seems that it will be a deja vu !

Where has the market headed?

With China cutting the RRR by 50 basis point and the joint coordination of Central Banks actions, both on Wednesday, coupled with bond yields lowering the sustainable level. Markets rose while taking a breather on Thursday.

I suspect Asia will be quiet on Friday morning with some action late in the Europe session while awaiting for the US nonfarm payroll data. The short to medium term, say one month will largely depend on the NFP data due, 930pm Singapore time.

If favorable, the US major indices will have one of the best week rally since March 2009!

Happy trading!

DJIA proved me wrong for November closing

(Posted Friday 3am)

The original post was posted November 29^th. It received very little audience. The post was posted before month end because equities performed so badly (as you all know) for the month of November. And it would have been a miracle if any major indices closed in the black.

I tried to be smart by closing before Novermber 30^th. But the market proved me wrong!

In conclusion, Thailand and Mexico did outperform the major benchmark by closing in the black. Unfortunately, KLSE did not make it and closed down for the month. I missed out Russia which performed quite well. The performance of Crude Oil contributed to the Micex index!

The miracle was that the DJIA came rallying all the way from Monday thru Wednesday (just three days) and closed positive for the month of November. It fell from mid November for two weeks. Within the last three days of November, the DJIA erased two weeks of losses. What a miracle!

For being smart, I tried to post before the headlines. The market reacted so quickly and proved me wrong. I have learnt a lesson trying to post before the headlines. I admit defeat.

But on the bright side, he who laughs last laughs bests!