Buy HIGH sell LOW, Huh?

A sea of red from Asia, UK, Europe and to the US....

It was just only a week ago where most, if not everyone were so excited with the global market rally.

The US major indexes were testing the resistance;

·         Dow Jones Industrial was at 13000

·         S&P 500 was at 1370 and

·         Nasdaq was at 3000.

(Did you read my post on Feb 7^th – Did you know? The BDI theory and four weeks henceforth....)

Similarly, emerging markets, BRIC, Europe, and Asia Pac were extending their weekly gains.

Newspapers, financial magazines, online financial providers were teasing the audience (especially those who missed the January rally – Tug of War – Part 1).

As you all probably know, I exited in mid February – safe and sound with a handsome profit.

The big boys, fund managers, big fund houses were also keen to take profit. However, to take profit they need to sell. That’s a very good point.

(Tug of war – Part 2, the direction the market was heading was unfolded. I was being polite by telling the audience, not to be a ‘sucker’!)

They want to sell but who is going to buy? The fund managers, fund houses, big boys bought low in Oct/Nov and they want to sell high at around late February. Yes, you guess right. Those who missed the boat, etc might just be the buyers; the big fund managers, fund houses want to sell.

The news acted as the middle-man (putting a carrot for the greedy and the ignorant).

Imo, once the ‘quota’ is achieved, Murphy’s Law will step in. You may just watch how the US markets will open tonight in the next 30 minutes.

My important point for the above post is that Be very careful on news that you read – you may just be the substitute the market is looking for.


Updated 11pm, Singapore time. Note that the current low is 12,800. If DJI closes below 12,800, the next support level would be 12,300-12400 level.

My next strategy:

While investors may start to fear, I would be watching very closely when this correction would end and planning my next few entry points.

The BLOG post that precedes the headlines
ONE step Ahead

Tug of war - Bull vs. Bear Part 2

A similar post was published last week on Feb 23^rd. Since then, there were a lot of happening in Asia and on both sides of the Atlantic.

As you probably know, Europe was overwhelmed with their 2^nd LTRO, US had a better revised GDP estimate, expansion in Manufacturing data from Asia to US and Bernanke’s testimonial. There were lots of volatility with the commodity currencies strengthening; the Euro weakening, Gold and Silver plunged! The price of Crude Oil rose from an Iranian report of an Oil pipeline explosion in Saudi Arabia.

How exciting? Let’s see where the Dow Jones, S&P and NASDAQ closed off for the month of February?

Hmmm! It seems like all the 3 major indexes had tested the resistance. Well, today is Friday and it would be interesting to note how the major indexes would close for the week. But on the whole, the activities is still displaying that there’s still a tug of war between the bulls and the bears. The indexes are still range bound. Huh? How boring? Tempted to go in?

I had received many emails and queries. Should we chase the market? Can we buy now? Now we all know;

BUY low and SELL high.

Isn’t this a very simple logic? What’s my point?

The levels we are seeing today for the Dow and S&P was last experienced in 2008, the Nasdaq is at 2002. We also know that the bottom was somewhere in March 2009. Hence, we’ve reached back to the levels of 2002 and 2008. What does the level of US index tells you???

Are the current levels at the high or the lows (of this trading range)?

Are you going to take profit or wait for more profit? Risk-reward?

Are you taking on more buys or adding new position?

We all know that we should buy LOW and sell HIGH. If you were to buy know, are you buying at the low or high?

What is the risk reward for accumulating new buys here or if you were to take profit here?

I hope I made myself CLEAR. You are the decision maker!

If you find this post informative, please do not hesitate to forward this to someone who might agree with this line of reasoning. Thanks in advance!

Focus for Feb 29th 2012

In my previous post, US Consumer confidence is high, what’s next? The focus was on US confidence data and oil prices. However, the focus for Feb 29^th was different.

Amidst the news released for Europe’s 2^nd LTRO, US GDP 2^nd estimate of 3%, better Chicago PMI data, am I correct to say you would expect that the US indexes would have surge north? Not so fast!

At point of writing and after Fed Reserve Chairman’s testimony to Congress, my opinion is that the speculation for another round of quantitative easing to stimulate growth was seen easing. This is the focus. And the US dollar strengthens.

As previously mentioned, the obvious primary beneficiary to additional QE is gold. And I was not surprised that Gold plummeted by 4.29% or US$ 76 to US$ 1711.70 at point of writing.

Unless the yellow metal changes its characteristics, and as long as QE is not on the table, I doubt there will be a rally in Gold amidst the speculation of most Gold Gurus; US$ 2000 and above. I would say FAT hope for the time being. I would stay away for the time being.

Black Gold as they were to call oil in the good old days also lost about 1% to US$ 104.90 thereabouts as a result of a stronger US dollar.

For the benefit of new audience, Gold had rallied back from US$ 1500 thereabouts to a current high of US$ 1790 as a result of hopes and expectation that the US Fed would provide additional monetary stimulus. While QE was on the table, the US economy got stronger and stronger. Gold got stronger as hopes for QE was still very high! But when the Fed Chairman did not hint any QE in his testimony tonight, the obvious had to occur.

I am not sure how the US indexes would end tonight but at least there’s some growth recorded for the month of February.

Tomorrow is a new day and the highlights for Asia would focus on China’s PMI and Fed Ben Bernanke (2^nd day) testimony to the Senate Banking Committee.

US Consumer confidence is high, what’s next?

As you probably know, the US indexes closed ABOVE psychological resistance last night.

The Dow closed at 13005.10; S&P500 closes 1372.18 while the NASDAQ closed 2986.76.

There were 3 economic data released last night;

·         Durable orders at -4.0% vs. -1.4% expected; Durable Orders ex Transportation at -3.2% vs. 0.2% expected. This is very negative

·         Case Shiller 20 city index at -4.0% vs. -3.6% expected. Another weak data.

·         Consumer confidence at 70.8 vs. 62.5.

And the market (preferably) focused on the Consumer confidence data, overshadowing (ignoring) the weak housing and durable orders data!

Huh?? With a strong showing of consumer confidence that leads to global growth and hence global demand for crude oil, oil prices experienced a sharp drop. Huh?? Imo, the oil traders (having a different mindset/analysis) were focusing on durable orders rather than consumer confidence??? It is their analysis, not ours.

In conclusion, the US markets closed on a very positive note as a result of favourable US confidence data and a drop in oil prices (while ignoring the weak data???). What if the US data were strong and the US consumer confidence were weak? Would the US market rise or fall?

Penny for your thoughts; The above shows that the market is exceptionally bullish. The market is ignoring ALL kinds of noises and focuses on favourable data. (Hence explains why I include global investors’ mindset to technical and fundamental analysis.) This could also mean that while today being Feb 29^th, the GDP data, Europe’s 2^nd LTRO, etc the market’s mindset could either head further north or trigger a sell to book profits

What would I do? The very fact is the market is very bullish. There is a lot of uncertainty this week with data coming from US, Europe, China and Japan. Uncertainty is we do NOT know what data is to be announced and how investor’s mindset will react as a result of the data. I would prefer NOT to gamble with uncertainty this time and stay on the sidelines.


Latest update: Wall Street will be listening closely to Federal Reserve Chairman Ben Bernanke over the next two days for any signs of distancing himself from the central bank’s pledge to keep rates at ultra-low levels for up to three years. Bernanke is testifying Wednesday in front of the House Financial Services Committee and Thursday in front of the Senate Banking Committee as part of his semi-annual report to Congress on monetary policy.

Another WTF happening, Feb 29th 2012

If you’re invested, you should take note of Feb 29^th. It’s a Wednesday. It’s also the end of month, lots of volatility due to month end closing. Thursday is the beginning of a new month where real money tends to come in. And Friday is the end of week.

In addition to the above, Feb 29^th has important US data namely US GDP 2^nd estimate, Chicago PMI, and the Fed Beige Book. All of which may lead to where March will trend. Across the Atlantic, the 2^nd tranche of LTRO is seen to be in the range of 500B-750B Euro (The first LTRO saved the EZ in Dec 2011).

With activities crowded on or after Feb 29^th, I would assume that markets will tend to be cautious prior WTF. Till then, household lizards will continue to test the DOW 13000 and S&P 1370 resistance. Whether they continue to attack the resistance levels depends on data and news of Feb 29^th.

HSBC had announced the flash PMI estimates of China earlier this week. China will announce their PMI data on March 1^st. Asia and Europe markets should take the cue from then onwards.

Though I have not posted any activities from Iran, I believe it’s time that our radar focuses on the activities there, too. As you probably know-hear/say of their Uranium program, energy prices had increased with a US$ 10-15 premium. Indirectly, this adds on to costs and had affected global growth.

The price of crude oil has risen from US$ 95 (to US$ 100) to the current US$ 105 (to US$ 108). This rise HAD dampened growth concerns in emerging markets like India and Indonesia. The hardest hit EM is Indonesia where the fall in the JKSE this week had wiped out the entire rally since Jan 2012. India had fallen 600 points from this year’s intraday high of 18,500.

On a separate matter, Insights had breached the 5000 pageview (this month) – a personal best and is nearing the 6000 pageview level. Again I would like to thank the audience for frequenting my posts. Please do not hesitate to forward/share my posts on reaching a larger audience. I sincerely hope that my timely posts and information assist you in making your investing decisions. THANK YOU.

Tug of war - Bull vs. Bear Part 1

If you’re wondering why most of my posts concentrate mostly in US markets, the obvious answer is that the US is still the largest economy on Earth. And the reserve currency is the US dollar.

When they energise, high yield assets go north. When they fall sick, high yield assets go south. It is simple as that. That does not mean we should ignore China or Japan.

The DOW had been ranging between 12800 and 13000 for the past 2-3 weeks. The bulls will test the 13000 resistance. If they fail, you might see 12400 supports being tested. If they succeed, 13800 will be the next resistance before the ALL time high.

The Greek event is over. Where is the positive news coming from? As I see it, none at the moment.

However, It is evident that carry trades had been the support for this current ongoing bull trend. The VIX is reasonably low, the US dollar is fair below 80-81, Global interest rates are low, the Japanese Yen had been weaker and QE3 hopes are still very much alive from the price of Gold. US Operation Twist and Europe's LTRO are taking effect.

Don’t ignore carry trades. With global interest rates so low, the CB are making you invest otherwise your purchasing power will be eroded by inflation!

On the other hand, global PMI is seen weaker, GDP growth are weaker with some revising downwards, credit rating agencies on going credit watch and downgrades.

My reading is that markets would generally trend sideways until the next event. So don’t get too excited about it.

What’s coming in the near horizon? Check your economic calendar for PMI data and

·         US GDP data,

·         Europe’s LTRO,

·         Chinese PMI,

·         US NFP

·         UK and ECB MPM.

I could be wrong but one of this may trigger the next direction for high yield assets.

However, if you have a LONG term horizon, you could ignore the above because the major trend is still north. I do not foresee markets going lower than Mar 2009.

Updated Feb 24th. Great minds think alike. I am glad the following article took of where i ended. It's nice that they can elaborate on my above article. Strange enough that i chose the title - tug-of-war!!! http://www.cnbc.com/id/46483737

Is a market correction coming?

The Dow is being attack by household lizards at the 13000  level. But, that is as far as it can go - similar to household lizards which loiter just around the ceiling.

On the other side of the Atlantic, the Greek deal is done. It is history. There is no default (yet!). The can is just kicked further down the road.

I repeat, "The Greek deal is done". What’s next? What is the GDP and Baltic Dry Index (BDI) and Retail Sales telling me?

Sometime back in my earlier posts, I mentioned that global GDP is getting weaker in most countries. The number is still rising at an alarming rate (and I am concerned, are you?).  The latest update; 21 countries registered a negative QoQ growth namely,

·         The Euro area, UK, Germany, Spain, Italy; and

·         Taiwan, Indonesia, Singapore and Thailand (which registered the largest negative growth of -10.7% QoQ and -9% YoY).

While the BDI projected better PMI data back in Q4 2011, the latest BDI trend is projecting weak PMI or factory orders. Coincidentally, this week – the HSBC Flash PMI for China, the PMI readings for part of Europe had been weaker than consensus. Am I correct?

I will not go into details of how many indicators assist me to make decisions, but I would like to share the above with you. Hmmm, something is amiss! There seems to be one more data that is not within my radar. Can someone share/hint what could be 'the' trigger?

At end of Q2 2011, my indicators help me speculate global bear markets; at end of Q3 my indicators helped me to speculate bear market reversals.

My reading is that while the long term trend is very bullish, the short term trend would be met by a mild correction in the next 3-6 weeks. The above is just a speculation. I have done my sharing.

If you’re still invested, you should ride the waves as long as possible. However, you need to position yourself close to exits.

As of current, I had made three speculations on Market trends so far. The Market has proven me right TWO times. Will I get it right for the third time? Again, TIME will be the judge. What’s your opinion?

I really would like to hear from the audience, that is, if the above indicators mean anything to YOU.

On a separate matter, I had been receiving an awesome number of pageviews this month - probably a record exceeding 5000 before the month is up. Thank You.