2012 Q1 was a bull trap

The Year 2011 was indeed a difficult year for the financial markets. We had the earthquake, tsunami, US credit rating and Europe issues, etc.

To cushion the fall in 2011 Q3, major economies intervened. The effects started to materialise in late 2011 Q4 as it takes time. Most of 2012 Q1 rally was spanned by the massive pumping of liquidity from major economies not forgetting from Japan and TWO (2) LTROs from Europe!

Amidst the rally in 2012 Q1, most of you who followed my posts would have realised the rally could not last as explained in buy HIGH sell LOW! Following which, Economic data starts to weaken

·         Weak PMI spanning from China to Europe

·         IP grows at a slower pace

·         Trend in exports and imports start to weaken in major economies

·         Negative GDP is noticed in most economies

·         Technical recession is found in most countries in Europe, etc

The ‘Risk ON’ tap was shut. Risk OFF was then laid on the table. As you probably know, this was triggered after the US data released in May 2012 coupled with several elections in Europe. Henceforth, most data released from Japan, China and Europe not forgetting the US starts to deteriorate. This coincided with 'Sell in May and Go away'.

Where did all the money go? Valuations in equities, gold, commodities, crude oil, etc. fell. Most of this was channelled to safe haven instruments like the Japanese Yen, US dollar, Treasuries and equivalents. With the rise in the US dollar, commodity currencies, crude oil, etc fell. This is a ripple effect. Unless Risk OFF is taken off the tap, the US dollar will continue to be of choice. Have you noticed the strength of the US dollar index?

Hence, we will have to wait until the laws of economics is triggered – Demand and Supply. Until then, be very (very) prudent on where, when, how much you might want to risk. Gold will be of choice BUT not at this time.

With no catalyst in sight or for that matter, QE3, LTRO, China stimulus can you find a reason to take risk? Bargain hunting is for the novice. If you do, please share with the audience.

While most of your investment tools may differ from mine, I strongly advise that you do not ignore my speculations. The current environment may not be visible to you but is very visible to me. The situation is totally different from what you understand. Be very careful if shampoo salesman tells you to buy because it is cheap. If you do without understand what you're going into, it is like burning your assets.

With total uncertainty in Europe, major trading partners will suffer the same fate (in trade). Even China will not be spared (in the near term) as China needs time to react to the situation. Hence, the global economy will slow down at a rapid pace.

From now Singapore time until Friday, 930pm I would expect the markets to be in a tight trading range despite the fact that PMI data from China, UK and Europe came out weaker than expected. The major focus for the week would be US data on ISM Index, nonfarm payrolls and Unemployment. The EZ joblessness data which just hit headlines rose to the highest level ever. I wouldn't be surprise if the US nonfarm payroll data completes the puzzle of weak unemployment. Otherwise, i'll be very surprised but am very sure any rally will be short lived.

Unless major economies work in tandem, coordinated (not individual) economies launch growth directions, any rally in the near future will be short lived. Greece is the focus and the giunea pig, put your focus in SPAIN - "Spexit". Falling currencies leading to higher inflation coupled with growth concerns is a crucial problem to most economies!

If you find my post of substance, please forward it to your friends to avoid any unnecessary damage to their investment plan or retirement funding! Thanking you in advance.

The following is a comical narrative of how Greece wins the world cup-->
Read next. and
China Making Contingency Plans for a Greek Exit

Greece needs more than an AMD

AMD is a medical term for Advance Medical Directive. As the name implies it is an advance of a medical directive in the event the individual is depended on a life support system.

I hope most of you had been informed by your financial planner that there exists an AMD in Singapore.  Currently, there is no cost to planning an AMD. The cost of not knowing/planning/executing an AMD is the financial burden or cost that your loved ones, dependants will have to fork out while keeping the life support system for you. Talk to your financial planner or your family doctor to get a fresh opinion.

The first stage, if Greece needs to execute the AMD is mid-June when the Greeks have to go to the polls. (pardon my punchline, is there a Greek government?) The result may/may not determine if Greece will stay with the Euro. Otherwise the can will be kick further down the road. As the play kicking the can successfully for the last three years, they will find that the wall is just a few metes ahead. No more room to kick.

While the focus had been Greece and Spain or Europe for the matter, the Grexit had overshadowed much event globally. Please be reminded that

·         Weak global growth is still a primary concern as witnessed by the camp of Energy speculators driving crude oil prices down

·         The relative strength/rise in the US dollar as a safe haven against most currencies signifies flow to safe haven and withdrawing/unwinding of carry trades in currencies.

·         Europe probably going into a technical recession affecting major trading partners – US, China, Japan and not forgetting global partners. Fall in exports; manufacturing, industrial production says it all.

While the strength in the US dollar on a back to back weekly rise, most currencies including Asian currencies are weakening dramatically resulting in lower GDP growth and rising inflation.

Unless global FM and leaders come to a quick and decisive plan, I wouldn’t be able to see how this ‘salted fish’ situation would ever be able to swim again. Hence, I would not be able to see how the current relief or ‘breather’ in equities market is going to last beyond this week where ‘packed’ financial data are to be released over the next couple of days...

Only the brave with a strong heart coupled with lots of lady luck could eke out a gain in this situation. That is what investment is all about - NO RISK NO GAIN. But i won't fall into this situation.

Read next--> Two bold predictions for Singapore
SUN TZU Art of War
Boom Gloom and Doom

Tug of war - Bull vs. Bear Ends. Financial market plunges. What's next

The above article commenced mid February with Part 2 in March and Part 3 in April. My benchmark for the tug of war list of events is the DJI ranging from 12800 to 13000. I had picked the above title, then, is because my speculation was that market would trend sideways until the next key events.

The DJI did not reach 13800 which is my technical resistance. The technical support was 12,400 which were breached last week. This demonstrates the risk-reward that was not favourable where market prices IS too high.

In Part 3, I speculated that the market would undergo a correction which you all probably know the answer by now.

Last week, DJI closed below 12,400 together with S&P500 and Nasdaq closing down for the week back to back. Hence, the tug of war or range trading had ended. Leading to the correction were the following list of events:

·         GDP were weak then

·         Currencies were lower (not USD) signalling higher inflation

·         Trade figures were generally weak

·         PMI were generally weak

·         China data continues to be of concern

·         Europe is a primary concern – Greece, Spain, etc

·         US GDP and nonfarm payrolls were weak (not an exhaust list)

·         Adding more insult to the market correction.

The above signals weak growth, higher inflation. This leads to my concern. Aren’t Central Bank and governments in a dilemma again? Monetary policies? Pardon my language – Screwed and f!@#$d??

However, having provided all the bad news.... here comes my technical reading.

Technically, RSI and various indicators signal ‘oversold’ levels. The big boys, fund houses may have program buying at key technical support levels. Hence, there’s a strong possibility the market would take a short breather from these oversold positions.

Following which markets may rally depend on the rebound or if short covering is triggered. We’ll cross this bridge at the appropriate time.

Carry trades

The global sentiment is risk-off. Volatility is high. This leads to unwinding of carry trades in currencies. Hence, safe haven currencies are sought after. The Yen and US dollar rises. Other currencies including commodity currencies weaken. This leads to a fall in commodities – mining, agriculture, etc.

Fundamentally, economic data are weak. There are global growth concerns. And without any geopolitical situation in the Middle East, Oil prices fall. That’s the good news!

Gold. The previous posts ended with Gold testing US 1790. The demand and supply would be determined by QE3 and the US dollar instead of safe heaven. With NO QE3 in sight then. I mentioned fat hope. As expected Gold plummeted to my mentioned support of US$ 1530 thereabouts, did anyone catch the price there? With NO QE3 in sight and if Gold would extend the rally, then I suggest you review your bargain hunting strategy in your investment portfolio.

At the moment, do NOT go all out and buy whatever your reasons is cheap PER, low RSI, etc but simply follow your simple strategy on entry points coupled with a determined discipline to cut losses. Dollar cost averaging will be strongly recommended for a 6-12 months time horizon.

On a separate matter...

Properties. This is probably your biggest and longest investment. Most, if not all would take the longest tenure. Here’s the problem most of you do not see. You’ll be paying the biggest loan and let the bank earn your money. Your principal gets lowered very very slowly. But, while interest rates are low, it is favoured to take the shortest term and lowest loan.  Your interest gets paid more and your principal gets reduced faster. If you chose the former, most of you will be in a BIG financial problem when housing loan rates accelerate to 2-3% and higher. More cash would be paid, affecting your cash flow and liquidity. Review your refinancing loan to avoid this very probable disaster you ever make.

The main point here is future afforability. Do not be blinded by low interest rates. Do NOT stretch your loan. It's ONLY a short term benefit. On the flip side of the coin you should take the opportunity of paying less interest at a shorter tenure with the lowest loan! Anyone disagrees with this point?

Tug of war - Bull vs. Bear Part 3

Here comes the correction! If you had followed my post, I seriously hope you didn’t buy HIGH and (later) SELL low with fear being the current sentiment.

Since my last post in early March, the title post remains the same, ‘Tug of war’, meaning I called for markets to trend sideways. My speculation then was that the equity market would not have any more energy or the catalysts to proceed further north.

The title post is the same, with the exception it is part 3! It is still finding direction and definitely not the finale!

Let’s look back with hindsight. If you had tried to chase the market after mid Feb, the risk reward, by calculation would not be attractive at all. By buying ‘very’ high (which I WARNED) there will be more worries and no excitement at all.

Since mid Feb, markets eked higher but corrected when the Fed Chairman made no mention of QE3. And when the sentiment was bearish enough ‘helicopter’ Ben hinted that QE3 is not off the table. Markets reached out higher where it gave the sentiment that the rally had resumed.

Enough act from America I think. Here comes the next scene but from across the Atlantic. It’s no longer Greece but Spain. Spain bond auctions were not well received. Risk off was the then sentiment. China PMI releases and weak data made the puzzle more interesting.

The story goes on and on, up and down, weak and good, etc with the last straw – weak data release where US nonfarm payroll – released on a ‘Good’ Friday where most markets were closed. ‘No horse run’ is my best bet where most investors could not exit.

If that doesn’t hurt sentiment US Equities saw further heavy selling as, across the Atlantic, European sovereign debt worries moved back into the forefront. Selling of peripheral debt caused the Italian and Spanish 10-yr yields to spike.

Markets had been playing investors like a yo-yo. (I am the spectator.) Fortunately, if you followed my post you would not have been a victim. The yo-yo is still-in-play and calculated events would determine the ‘buy’ entry.

US markets had closed badly with an average lost of 1.7% bringing the Dow and S&P 500 back to 12,715 and 1358 respectively. The market made a turn and came back where it was where I last posted! My speculation is that the US markets will pass the baton to Asia then to Europe. Earnings season should dictate henceforth.

Alcoa, a Dow component triggers earning season by beating estimates after the bell.

The BLOG post that precedes the headlines
ONE step Ahead

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

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.

Dow is being attack at 13000 after Greek package

(Posted Tuesday in Singapore, 1120 AM, UPDATED 0625PM )

The Dow and S&P is seen testing the resistance level of 13,000 (broken) and 1370 respectively - 3 points short! The US markets open higher, fell below the flatline and is seen testing the resistance level before lunch. Traders should follow the Dow theory before making a decision. Earlier in the day...

 

The much awaiting had been annouced (from CNBC first) after an extended meeting (The annoucement/meeting was delayed 6 1/2 hours!). The most important point is that there's NO default. Whether there is a rally is NOT that important.

Click CNBC for details.
Click Marketwatch for details.
Click Bloomberg for details.

The (release of the) news does NOT guarantee a market rally! Let's see how Asia, Europe and the US would react with this news in Equities, Forex and other high yield assets.

Asia/Pacific equity markets are mostly in the red with the exception of Oz, New Zealand, Thailand and Indonesia. Click here. One possible reason why the market may not be rallying, click here. Mumbai opens with a 0.3% gain. Asia Pacific markets closed mixed with S. Korea, Taiwan and Japan in the red.

Europe open mixed and traded in the red with an average of 0.5-1% losses for most of the day before closing.

The market reaction that follows depends on

• how markets HAD been building up prior to the European meeting,
• hopes and speculation of a 'done deal' and
• investors mindset following the release of the news.

The Euro is volatile! It touched and broke the day low upon the release of the news and subsequently tested and broke the high at 1.3290 resistance. At point of writing, the Euro and commodtiy currencies are in the red, also.

It looks like prior to the meeting, the markets were rallying on hopes which explains the rally last week. How long will this rally last? Once the deal (news) is done, the market is finding new source of information to look for the next trend.

It looks like, we'll just have to wait and see how the US reacts to the Greek package and show us the way for the next trend. Note: The US had not reacted to the Chinese RRR rate cut as they were close for President's Day. Last week's data on Retail Sales was very disappointing!

That'll be all for the day until the next event - Europe's 2nd LTRO scheduled Feb 29th 2012.

How long will this rally last?

(Posted on Monday 1am)

The US equity market or in any stock market, as usual, is ahead of the (US) economy. When US stock/indices start to rise in October 2011, the US data started to improve, right? Most of the US data had been pretty good so far, with the latest being, the Non Farm Payroll and Unemployment data.

With the exception for the Euro Zone; the US, BRIC, emerging markets, Asia reported

·         Better data namely PMI,

·         Monetary stimulus,

·         Corporate earnings beating expectations,

·         Lowering interest rates (in support for growth vs. Inflation).

And some of you probably know that the volatility index is at current at 20 thereabouts from readings as high as 45!

And what does the last two points encourage? That is, in an environment where interest rates are low and volatility is not high. It encourages carry trades.

If you’re not too familiar with the carry trade concept (please Google it, this point is VERY important). And the king of safe haven currencies is the Japanese Yen.

Did you notice what happen to the Japanese Yen and the US dollar lately? While most economists, fund houses are bewildered with the fact that the Japanese Yen is weakening against most major currencies (apart from the recent monetary stimulus), the obvious reason is; in a low volatility environment coupled with very low interest rates (for an extended period of time like the US until end of 2014) this encourages carry trade. That is borrowing from low yield assets and investing in higher yield assets like the Aussie, Kiwi, Loonie, commodities.  Similarly, high yield assets like stocks rise. Does this explain why the high yield assets (like commodity currencies) have strengthen? The Euro is NOT!

Hence, let’s get back to the subject matter of this post.

If you follow most, if not all of the above, you should follow closely to the volatility index, VIX! For e.g. One of the possible events that may cause the volatility index to rise/spike could be the events that are brewing in Europe; Greece and/or Portugal, etc. And when that happens, it is known as unwinding of carry trades. What happens thereafter is your imagination!

Finance ministers from all 17 euro-area countries meet in Brussels (Monday) as governments close in on a deal to unlock a 130 billion-euro aid package for Greece. Hence, my speculation is that volatility will be highly in suspense before the news!

News over the weekend - China cuts RRR by 50 basis point, effective Feb 24th, 2012 afterwhich a newsflash from Bloomberg on China. Japan to assist Europe solve the debt crisis thorugh the IMF. (Specifics are not out yet.)

And if some of you still don’t follow, please feel free to comment or ask questions. While the rest may understand the above, why not drop me a comment on the above analysis! And if you like the post,

·         (This had to be deleted) - apologies for the grave mistake on adverts.
·         forward the post to your friends 

·         Add (like) me, if you have not done so.

For the record, my posting since Jan 2012 had been very receptive with my last post, Investment planning, huh hitting ALL time record high page views. Thank you for visiting my blog for quality and timely posting.

What does Better (Global PMI + US payroll data) equates to?

(Posted Monday 250am)

The equation,

Better (Global PMI + US paroll data) = RISK ON!

As you probably know, PMI data coming from US, China, UK, etc has been better than expected. Global equity markets extended their weekly climb with the exception for Mexico, Australia, KL and Japan, just to name a few.

Some of you may not have realised that the US market had been stronger than expected. With the latest US data, the Non Farm Payroll and Unemployment data lowering to 8.3%, the Fed Chairman’s monetary policy of holding the Fed fund rates to end of 2014 is a question mark!

This is interesting. Did you know that the Dow Jones IA closed last week at a 3 ½ year high breaching the Q3 2008 high before the Global Financial Crisis (GFC). It broke my resistance level of 12,800! And the S&P Golden cross is evident! Do we need QE3?

VIX and the dollar Index. The US dollar index met resistance at the 81.5 resistance and reversed course following lower global growth worries. Couple with better France, Spain, Italy bond auctions after S&P downgrades France, the volatility index, VIX plunge to levels below 20.

I don’t need any stinking QE3. With the above, the probability of QE3 may be lowered. As Gold is the primary beneficiary for monetary easing or QE3 prospect, spot Gold plunged!

On Friday, the Europe crisis prolongs with high yield Portugal bond auctions and extended Greek talk with the Trioka. As a result the Euro plunged after climbing against the US dollar after the payroll data. On the other hand, commodity currencies like the Aussie rose to the highest level as carry trades is attractive in a low VIX environment.


Updated 6th Feb 0630 am. Greece PM and the Trioka agrees on Deal Framework. Details of framework to commence later Monday Greek time vs China’s Lowest Lunar Sales Since 2009. What I wonder which side would Asian investors mindset be focus on?

 

If you were to realize the above, it is EVIDENT that global equity markets are temporary disconnected with the prolong debt situation in Europe. I think global investors are NUMB (by now) but I speculate there will be one more possible dip before end of month. This would be another possible buy-on-dip.

The after effects of a better than expected US payroll data had not been reflected by Asia. There is a possibility that the US might pass the rally baton to Asia or would Asia markets fade towards the European markets opening because of a prolong Greek-Trioka meeting?

I have a personal interest in Indonesia and am eagerly awaiting their GDP data, due Monday with a better than expected GDP data!

If you’re a global investor, you may probably know that inflation had receded in most countries and most Central Banks has lowered interest rates to support growth rather than battle inflation. Particularly of interest are in Emerging markets as well as BRIC. The yield curve is leaning towards being normal. As such, it is a no-brainer that BRIC economies like Brazil, Russia, India and China resulted in a better performance than developed economies YTD.

WARNING. Do not be too greedy. Expected the unexpected if you are not following closely on the Baltic Dry Index and its possible consequences!

For new audience joining my blog, we welcome you. You may also be interested to know that this is probably the ONLY blog to speculate that markets

·         Would fall three months before the DOW plunge a 2011 low prior Oct 4^th 2011 and

·         Would rise three months before the DOW breached a 3 ½ year’s high of current!

Please feel free to read Market Trends, Investing commencing May June 2011 and Oct Nov 2011 for my speculative posting.

If you find the blog beneficial to your investments or risk management planning, you may ‘like’ me or subscribe to my emails (FOC). If you feel the post may benefit your friends, feel free to forward the articles.

Golden cross in S&P? Should we chase the market?

(Posted Singapore time, Thursday 120 am)

As you probably know, the S&P is forming a Golden Cross lately. This is where the 50 days moving average passes through (up) the 200 days moving average. To most technicians, it would be a bullish signal for the US markets! Or is the S&P forming a doji?

The market is there always. Be patient and wait up till US nonfarm payrolls registers on Friday. In addition, we have to wait how the market interprets the nonfarm payroll data and closes for the week. Whichever, the Golden Cross or the Doji, we have all the time to react after the market closes. Just be patient!

Meanwhile, the noise from Europe has been holding global markets. Greece is for one and Portugal for the other.

Is Europe playing time for an orderly Greece default?

Bond yields for Portugal auction dictates the markets lately. One day shooting above 15% while shorter bond auctions bring the yield down. Whichever, my advise has always been ‘be patient’. Think of the bright side, no matter the volatility, the lows are getting higher! Correct me if I am wrong?

And the Dow, it’s testing the 12,800 level again. As you probably know that I am holding long positions, I’ll hold till it breaks the 12,300 level. Otherwise, the S&P Golden cross and the Dow 12.800 resistance level looks attractive for more DCA!

The Global PMI data which includes Germany, China is posting better growth. This eases the global growth concerns seen one year ago.

In brief, my other speculation is the current mood is RISK ON.

·         Look at the Euro! The Aussie

·         Gold, which has always been a primary beneficiary for the QE

·         The weakening UD dollar index

·         VIX is below 20!

Talking about QE, what would be the effect of high yield assets if there is a combination of QE from Japan? Europe? US? and the UK? You would probably guess the answer from here onwards, right?

Are you all still skeptical? Are you all still bearish? If the opportunity arises, buy and average your position for every dip. Until the unexpected occurs, I think it is a speculative opportunity to average up your portfolio for a potentially higher yield!

The other advice is do NOT be greedy. The market is always there the next day!

Notes: As you probably know, I’ve been posting fewer blogs. The rationale so far has been my speculative posting has been correct so far, while ignoring the noises. Despite the noises, the lows are getting higher and the resistance has either being tested or broken.

Feel free to drop me a line if you have concerns with your current portfolio. My advise will always be based on your investment objective, time horizon and risk profile.

Happy Investing! What a great Year for the start of the Water Dragon!

I like to be proven wrong sometimes...

Year 2011 was a very volatile year. Topping in Q2 2011 and then falling in Q3. Global equity markets reversed in 2011 Oct and kept on climbing. That’s when I started to speculate that we’re out of the bear market.

Though the market was volatile, I mentioned the markets were trending North despite the volatility. Bottoms were made at 10,400 and 11,250. Who would know where the Dow would meet resistance in the future?

The rally stalled in Nov having gained support in late November. Equity markets continued to climb assisted by the Santa rally commencing mid December. Again, the post was reinforced that we’re out of the bear market.

Is it time to go in? Should we chase the market?

In my last post, I hinted that the Dow would meet resistance at the 12,800 level. Did you all notice? On Jan 26^th, the Dow broke through 12,800 to 12,830 thereabouts but closed below the 12,800 level. From there onwards, the Dow had closed lower for the next two days.

The rest is history? Who would have known that the Dow would meet resistance at the 12,800 level?

I like to be proven wrong. So far, the market had proven me right for many a times! The US major indexes has risen 20% so far. A correction would be healthy.

What’s in store for the Dow’s near future?

·         A trading range from 12,300 to 12,800?

·         Market to fall below 12,300?

·         Markets to consolidate and head northwards, break 12,800 for a stretch target at 13,800?

We like to hear your views! What’s your opinion?

My daughter Michele once asked, Daddy, how do you spell a blind pig? Puzzled, bewildered, I gave up. The answer is PG because a blind pig has no eyes (I). That’s the initials for Portugal and Greece. Listen closely to what’s brewing up in Portugal!

For the record, we’ve been ‘long’ since October 2011. The profit is reasonable and decent. So far we’ve been invested in Asia Pacific with additional concentration on South Korea, Australia, Hong Kong and of course, Indonesia with a small percentage in India for the more aggressive risk profiles! Our speculation in the above could not be better.

Gentle reminder on investing. Follow your strategy.

·         Have a good entry level

·         A support and

·         Resistant level.

·         Cut your lost on your portfolio no matter where the market is heading. This avoids an even bigger lost.

·         Ride your profits until resistant levels are tested and to take profit where resistance level looks difficult to be breached!

Happy Investing!

My AUM performance for Year 2011

(Posted 1040am Friday)

In my previous post on global equity performance, the median on the average is (slightly above) a loss of 20% with the best performer Indonesia at -0.7% and the weakest performer Greece at -50.31%.

As for my (Asset Under Management) AUM for Year 2011, the median is -2.32% with the best performer at 3.85% and the weakest performer at -12.35%. 67% of investors had less than 3% of losses.

As everyone probably knows, the higher the risk, the higher the returns and if we want higher returns, we need to take higher risk!

During the 1^st half of 2011, we were able to eke a positive return of 2 to 3%. As I posted the fall of financial markets in Q3, we manage to shelter from the bearish market and cushion the fall to a loss of 5%. Taking DCA positions commencing Q4 minimize the loss and hence -2.32%.

Through a combination of fundamental, technical and understanding global market sentiment, pro-active and reactive management was exercised. We allowed gains to run. Similarly, we cut losses at technical support levels thus avoiding huge losses. In recognition of bear traps, we avoided a majority during the 3^rd quarter.

How do we see the market from here onwards?

You would probably know,

·         the US economy had been having better than average economic data. The stock market still holds good/well above 12,300 with a range to 12,800.

·         The Europe sovereign issue is less of a threat, despite S&P downgrades of several European countries including France and well as the EFSF. Bond auctions have been impressive!

·         China’s GDP elevated Global markets sentiment earlier this week.

·         Global MPM supports growth rather than combating inflation.

·         Manufacturing data has improved.

To expect the unexpected

·         Future credit rating downgrades

·         Orderly/disorderly Greece default

·         Noises coming from China and Europe.

May I take this opportunity to wish all celebrating the Lunar New Year

KONG XI FA CAI

AND May the Year of the Water Dragon bring lots of water, good health and prosperity to one at all