After 6 "black candle" sessions, there is finally a white candle. Well, when there is a low, a little perk is what we can expect. The market closed on Friday at 2892.54, up 12.09 points from Thursday in a relatively weak upswing. Just when you think it is headed for doom, it crawls back after 330pm.
Right now, I would turn my sight on the US markets. The Singapore market is still reacting to how the US market has moved the night before.
The key word now is INFLATION. Such a simple concept that we often take for granted when all is fine and dandy. Here, I would like to take the opportunity of introducing Mosaic Theory. Mosaic Theory is an idea that people can piece together a picture of what is happening by putting together bits of random, seemingly unrelated information. By putting various sources of information together, here is my opinion of what is happening:
Commodity prices are obviously rising and this has not only driven inflation but also interest in the commodity market. Speculation can be expected to drive prices much higher if no intervention takes place for the short term. The root of all evil now is Oil. Oil is a necessity not only for energy purposes but also for transportation and cooking and it is what we eat too. If oil prices continue to skyrocket, which it probably will in the short term, there is no end to this inflation. Sounds like a non statement? Well, the thing is, I believe there is a price we are all willing to pay for oil and there is a conviction to increase production somehow and also a conviction of commercialising alternative sources of energy. Keeping this in mind, the high oil price will only make more expensive sources of energy more viable and put a stop to this frenzy soon.
That is easier said than done but the point is, the markets are not about to recover that quickly. This further supports my inclination to believe those that talk about a long recovery.
Good news for all. This also means that people have a longer time to seize opportunities when they come. We are all trying to spot a bottom but we don't have to. We just need the guts to tell ourselves to take the plunge in a bad market whether it is early or late and profit in a longer run.
Once again, this is an opinion. Readers, please feel free to challenge or question it. There have been no comments so far but it is welcome to spark a more lively platform.
Saturday, July 5, 2008
Wednesday, July 2, 2008
Lost of Direction
The market seems to have been a little lost today. It opened a little higher and surged about 14 points upwards before crashing about 35 points under the 2900 mark and then recovering to close 0.56 points lower than yesterday at 2906.23. A roller coaster ride indeed.
Even though today's action showed a glimpse of hope between 4pm to 5pm, the downward trend persisted after 5pm. I would expect tomorrow to be a bleak day. Wall Street continues to be weak today as this post is written. Technically speaking, all is not good.
Despite the gloomy days ahead, I would like to keep an optimistic outlook in suggesting that people look out for valuable buys. A point to note is that markets crash faster than they recover. This would mean that bad times are less than good times. Some might wish to go for speculative very short term trades. However, I am not in a good position to comment as a speculator and to advocate that. I am an analyst who looks more at the numbers, not a speculator.
Good news for readers as I am now developing a set of customised indicators that I can soon post a snapshot of and give all readers a picture of what I am writing about. Finally, pictures and explanations! Please do join my poll to give me feedback. I shall be constantly improving this site and providing better insights. Readers can expect posts to pick up in this volatile season however, the standard will still be kept to at least 1 post per week.
Even though today's action showed a glimpse of hope between 4pm to 5pm, the downward trend persisted after 5pm. I would expect tomorrow to be a bleak day. Wall Street continues to be weak today as this post is written. Technically speaking, all is not good.
Despite the gloomy days ahead, I would like to keep an optimistic outlook in suggesting that people look out for valuable buys. A point to note is that markets crash faster than they recover. This would mean that bad times are less than good times. Some might wish to go for speculative very short term trades. However, I am not in a good position to comment as a speculator and to advocate that. I am an analyst who looks more at the numbers, not a speculator.
Good news for readers as I am now developing a set of customised indicators that I can soon post a snapshot of and give all readers a picture of what I am writing about. Finally, pictures and explanations! Please do join my poll to give me feedback. I shall be constantly improving this site and providing better insights. Readers can expect posts to pick up in this volatile season however, the standard will still be kept to at least 1 post per week.
Tuesday, July 1, 2008
The Plunge
The market plunged lower today. The near term looks more bleak than expected. The market has reached 2906.79, down 40.75 in a single day. Although this 1.38% loss cannot be compared to the more than 2% losses 3 months ago, it is rather significant in bringing the market closer to its March levels.
Counters-wise, the 4 winning components of the market were out-numbered by the 26 losers. It is interesting to note that SembMar is now more expensive than Sembcorp. I would expect the price of the parent to be at least a bit higher. SingTel fell to 3.57, the tip of its previous bottom leg in the past month. Looking at the big black candle today and the dark cloud yesterday, SingTel can be expected to fall lower, bringing the index with it. The Banks, interestingly, are just starting to go "bear" from their RSI falling out of the 40% - 60% range.
My near term revision of "the bottom" is at 2900 +/- 50 now, shifting only 50 points downwards. The rationale here is that Wall Street indices are showing signs of a rounding bottom in the near term. The chances of yet another significant plunge is not likely in the near term unless oil prices continue to surprise us as they did last week. Regional indices like the HSI and Nikkei as carefully coupled as well. On the part of the counters here, most index counters have hit their lows. Further downside is possible but may not be very significant. This shall play a part in supporting the index numbers.
Buy period can be soon. I shall be carefully monitoring the situation and providing my reports. Keep watch daily these few days to get up-to-date highlights.
Counters-wise, the 4 winning components of the market were out-numbered by the 26 losers. It is interesting to note that SembMar is now more expensive than Sembcorp. I would expect the price of the parent to be at least a bit higher. SingTel fell to 3.57, the tip of its previous bottom leg in the past month. Looking at the big black candle today and the dark cloud yesterday, SingTel can be expected to fall lower, bringing the index with it. The Banks, interestingly, are just starting to go "bear" from their RSI falling out of the 40% - 60% range.
My near term revision of "the bottom" is at 2900 +/- 50 now, shifting only 50 points downwards. The rationale here is that Wall Street indices are showing signs of a rounding bottom in the near term. The chances of yet another significant plunge is not likely in the near term unless oil prices continue to surprise us as they did last week. Regional indices like the HSI and Nikkei as carefully coupled as well. On the part of the counters here, most index counters have hit their lows. Further downside is possible but may not be very significant. This shall play a part in supporting the index numbers.
Buy period can be soon. I shall be carefully monitoring the situation and providing my reports. Keep watch daily these few days to get up-to-date highlights.
Thursday, June 26, 2008
A weekly update indeed
As I mentioned, there shall be weekly updates on this site. There will be. Thank you, the readers.
The Singapore market has seen a little intra-day spike today, in line with the Dow and Hang Seng. The Nikkei seems like it is beginning to decouple however, there is no clear indication of that in the near term.
Blue chips that I have been watching on the local market have dipped significantly with counters like Kep Corp now under $11 and F&N in the $4.50 range. Popular Yangzijiang shipbuilder has fallen approximately 10% in the past few weeks.
The Fed's "hold" stance on Fed funds rate has caused a short live exuberance to the market until the realisation that required rate of return shall remain low or the time being. This has made equities less attractive in this inflationary environment.
Back to the market, today's little "tombstone" candlestick could well spell the death of optimism that started just yesterday. The near term can be expected to be down. However, considering the Singapore market's coupling with the US and regional markets, I would not consider revising my target of 2950 +/- 50. The DOW has reached it's March levels. Market sentiment there is negative but March's recession fears have been softened. Significantly further downside is unlikely. Japan has been doing better than Hong Kong and Singapore, a slight divergence has been noticed in the past month. Hong Kong has been moving very closely in line with the Singapore market which can be observed to be taking cues from the US.
I am currently watching for a bottom, buying spree.
The Singapore market has seen a little intra-day spike today, in line with the Dow and Hang Seng. The Nikkei seems like it is beginning to decouple however, there is no clear indication of that in the near term.
Blue chips that I have been watching on the local market have dipped significantly with counters like Kep Corp now under $11 and F&N in the $4.50 range. Popular Yangzijiang shipbuilder has fallen approximately 10% in the past few weeks.
The Fed's "hold" stance on Fed funds rate has caused a short live exuberance to the market until the realisation that required rate of return shall remain low or the time being. This has made equities less attractive in this inflationary environment.
Back to the market, today's little "tombstone" candlestick could well spell the death of optimism that started just yesterday. The near term can be expected to be down. However, considering the Singapore market's coupling with the US and regional markets, I would not consider revising my target of 2950 +/- 50. The DOW has reached it's March levels. Market sentiment there is negative but March's recession fears have been softened. Significantly further downside is unlikely. Japan has been doing better than Hong Kong and Singapore, a slight divergence has been noticed in the past month. Hong Kong has been moving very closely in line with the Singapore market which can be observed to be taking cues from the US.
I am currently watching for a bottom, buying spree.
Thursday, June 19, 2008
Good news and Bad news
Good news for all who read this blog. I shall be maintaining my posts to at least 1 per week to provide readers with a weekly digest. More details later. Watch this space!
Bad news, the market does not seem to be doing well now, even though there was an early rally this week. It finished 47.43 points lower to 2992.66 falling into my target range of 2950 +/- 50. The RSI on the STI indicates possible bear market to follow. I am considering revising my target range downwards.
On the other hand, current sentiments, as seen from 5-day candle sticks indicate that there are sentiments keeping the market afloat in the very short term. This may cause the market to range in the short term when the bulls keep fighting the bears. Right now, the market is also in a sort of "wait-and-see" mode. This may further affirm the range phenomenon.
A strategy one can adopt now is to follow the "wait-and-see" mode. Afterall, we all hope to ride on a wave. Now, we can all wait for better weather before we set sail. However, those with a longer horizon and are not sensitive to short term fluctuations may want to take advantage of the low prices on certain counters.
Bad news, the market does not seem to be doing well now, even though there was an early rally this week. It finished 47.43 points lower to 2992.66 falling into my target range of 2950 +/- 50. The RSI on the STI indicates possible bear market to follow. I am considering revising my target range downwards.
On the other hand, current sentiments, as seen from 5-day candle sticks indicate that there are sentiments keeping the market afloat in the very short term. This may cause the market to range in the short term when the bulls keep fighting the bears. Right now, the market is also in a sort of "wait-and-see" mode. This may further affirm the range phenomenon.
A strategy one can adopt now is to follow the "wait-and-see" mode. Afterall, we all hope to ride on a wave. Now, we can all wait for better weather before we set sail. However, those with a longer horizon and are not sensitive to short term fluctuations may want to take advantage of the low prices on certain counters.
Thursday, June 12, 2008
Trying times ahead
Our market opened 1.8% lower this morning and closed 0.9% down at 3020.15. The candle however, was a big white candle. Based on these two points, the market seems to be sparingly optimistic to a certain extent.
The very short term outlook however, is relatively bleak. With inflation hitting markets all over the world, sentiments on business for the rest of the year is gloomy. On the other hand, recession fears are not as strong as in March, from the fact that a slowing economy is not a contracting one.
With Fed rates expected to rise, the expectation on the market for return will rise in tandem. This will raise the bar on equities to cause rating downgrades in certain cases. My current outlook on the effects of this will be a slow recovery from the current dip which has yet to find its bottom.
Considering all the above factors, we can expect the next support of the STI to be lowered to about 2950 +/- 50. My reason for this is that with recession fears lifted while inflation fears persist, market value will fall close to March levels but not to March levels or below. Price inflation means that the PV of stocks, as compared to before, should be higher to reflect their old value. That can keep the market afloat at least in the near term.
As long as the hope of a late year rally still remains, there is no reason to fear a collapse. In fact, those who believe in it are likely to buy-and-hold in such a time and fulfill the prophesy.
The very short term outlook however, is relatively bleak. With inflation hitting markets all over the world, sentiments on business for the rest of the year is gloomy. On the other hand, recession fears are not as strong as in March, from the fact that a slowing economy is not a contracting one.
With Fed rates expected to rise, the expectation on the market for return will rise in tandem. This will raise the bar on equities to cause rating downgrades in certain cases. My current outlook on the effects of this will be a slow recovery from the current dip which has yet to find its bottom.
Considering all the above factors, we can expect the next support of the STI to be lowered to about 2950 +/- 50. My reason for this is that with recession fears lifted while inflation fears persist, market value will fall close to March levels but not to March levels or below. Price inflation means that the PV of stocks, as compared to before, should be higher to reflect their old value. That can keep the market afloat at least in the near term.
As long as the hope of a late year rally still remains, there is no reason to fear a collapse. In fact, those who believe in it are likely to buy-and-hold in such a time and fulfill the prophesy.
Tuesday, June 10, 2008
Back in action
It has been about a month since I posted an entry.
The market has taken a turn and shed about 100 points in the past 2 days. Even though the outlook does not seem bright, in my opinion the support shall remain firm at 3000 +/- 50. Despite the coupling with tumbling Asian markets, there is no reason for the market here to fall far below this support considering the stabilising Dollar and rising US interest rates for the moment.
The short term outlook is that the market shall continue to range and the possibility of a late year rally still lingers. In such a time, it can be a wise strategy to go for yield or total return. Capital gain is difficult for the average retail investor who has limited resources to respond to short fluctuations. In a time like this, cheap buys can be picked up for late growth companies and mature companies. These picks offer stability and assurance in such times as well as decent dividends. A cheap buy can mean a decent capital gain on top of dividends.
Another way to reduce uncertainty is to go for index weights or buy into structured index linked products. However, this is only for those who have a longer time horizon in mind.
Think risk and return.
With US Fed rates about 4% and equity risk premium of 7% on average in the Singapore market, a decent return can be expected for now.
The market has taken a turn and shed about 100 points in the past 2 days. Even though the outlook does not seem bright, in my opinion the support shall remain firm at 3000 +/- 50. Despite the coupling with tumbling Asian markets, there is no reason for the market here to fall far below this support considering the stabilising Dollar and rising US interest rates for the moment.
The short term outlook is that the market shall continue to range and the possibility of a late year rally still lingers. In such a time, it can be a wise strategy to go for yield or total return. Capital gain is difficult for the average retail investor who has limited resources to respond to short fluctuations. In a time like this, cheap buys can be picked up for late growth companies and mature companies. These picks offer stability and assurance in such times as well as decent dividends. A cheap buy can mean a decent capital gain on top of dividends.
Another way to reduce uncertainty is to go for index weights or buy into structured index linked products. However, this is only for those who have a longer time horizon in mind.
Think risk and return.
With US Fed rates about 4% and equity risk premium of 7% on average in the Singapore market, a decent return can be expected for now.
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