Thursday, February 11, 2016

Deflation


Hey Folk

Today is the third day of the Chinese calendar. I wish everyone Good Health and Wealth for you and family.

We have been in a inflationary economy for many donkey years. Will we changed?? Will we be in a new world order??

Japan have introduce a negative interest rate environment. Mean if you put money in the bank, instead of earning interest, you need to pay bank interest. They wish that there are more spending in the economy. These is a period of deflation. Where price do not go up, it goes down. Because it is going down, you will wait and wait and wait before you buy. Of course, my explanation is in a nutshell. The more professional explanation is like a few page long.

Anyway, the world is in a great depression or deflation in the 1929s. People whom had experience this period are either already dead or too young back then to know what is happening. So it is very new to the world and not many people or no one at all knows how to handle this new situation. It is something like if the Fed raise rate, it is new to a lot of traders and financial analysis as rate are depressed for a good 9 years.

Will we really go into these??? I do not know, but some of famous investors said so. I think if these were to happen it will not be so soon. Probably another 5 years to a decade.

On Chinese New Year day, our PM said that we will not be in a Global Financial Crisis. Believed him. It is a slowdown. But probably like in the 07-08 crisis, they have already something up in their sleeve to prevent Singapore to be hit hardly???

Back to focus, I said that Singapore market is drying up in volume. I also know that they have appoint a new CEO a local instead of having a foreigner. Hope that he can revive the Singapore market. I really hope that these happen.

STI key number to hold is 2530. Once break, please use CFD to short. Remember this market is already in a bear.

Bonds are making new high this week. So portfolio with bonds should see certain improvement by end of month. Fund/unit trust are always slower.

My take is a rally in US market end of Feb. Then it will bring the world market to rally as well. Some market whom are already in a bear will be a dead cat bounce. ( mean even a dead cat will bounce if it falls from a great height).

I may be wrong. So please do not take it at 100%.

Cheer

Sunday, January 31, 2016

Bear Bull Crash Rally


Hey Folk

Let look at some of the major market


Singapore Market weekly chart the equivalent of STI.
Look at the chart. It span from 2011 to now. Our STI are already in the bear market since last year. I do see some divergent in the indicators. So I think a rebound is due. But this is a rebound in a bear market and given the weakness of this market, when the strong market rally it might just have minimum influence on the upside.

Anyone wish to participate in this market have to be cautious. Also I did say before that our exchange is really dead. There is not much volume.


This is China A50. A ETF equivalent to SSE. This is a weekly chart
This is a wild market. It went up wildly start of 2015 and came down within the same year. This market is not in a bear yet. If it break up around 11,000 area and stay, this market is charging again.
From the indicator, it say to me that there are no more strength to the downside. From price point of view it did not break the previous low, which is a pivot point on that week of 23 Aug 2015.

This is Nikkei equivalent. This is a weekly chart
This market is not in bear yet too. It actually follow very closely to the S&P500 market. This market still have strength.

This is EuroStoxx. This is a weekly chart.
Still have strength to move higher. Not a bear yet. Just a change of trend from up to down. Comparing to Nikkei, this market is stronger.
From indicators, there are divergent.
This is Dow Jones weekly chart
The Strongest market in the world. All indicators tell me there is a upmove.

I forecast a rally coming end of Feb. This will be a last leg. However, that is just a forecast. Along the way, I have to see the accumulation and other correlations.
So the strongest to the weakest market Dow, EuroStoxx, Nikkei, Chinaa50, STI.
We will find that Asia have the weakest market. Eg of some are Taiwan, KL, Korea etc
US President have announce on the State of Union speech that America is at the best now and still the world best. I think they will still lead the way.
China is the second best and still the second best now. Prior to the crisis all raw materials are purchased by China thus all the high prices. Now they are not buying that why all commodities are at very low price which in turn affect a lot of emerging market due to their economy structure.
Take a look at abalone, is it cheaper now??
Also low oil price actually is the cause of not so good economy, but also mean lower cost of doing business which make economy better.
Cheer



Friday, January 8, 2016

Market crash market slide


Hey Folk

A fresh start!!

Let me jump right in to the market first. I think the US market is going to stage a last leg rally. This may create a new high. There are a lot of commercial buying since 14 Dec 2015 till today.

This will pull the world wide stock market to a rally as well. The weak market will stage a rebound. The weaker market are STI, HSI, KLCI, SSE etc. Most of them are Asia market. If you have position you may wish to unload.

The forecast

Stock Market Forecast for 2016 is not at all pleasant. Stock market will transit into bear market in 2016. I think there maybe a rally coming in soon for the first half of the year. If the FED raise rate as plan, by June it will be the third rate hike and is when the market turn bear.

I missed my 2015 stock forecast by 11 points in the S&P 500. I foresee it as a positive year but it end up to be a negative year.

Oil will still be going down at least for the first half of the year. This instrument is getting harder to predict. Some of my indicators is telling me that it will be mixed for the first half of the year.

Gold is staging a rebound, but is still a downtrend.

For Singapore stock investors

Singapore market is suffering a lack of participation in the market. There are very little investors coming into the market. We are a first world economy, a financial hub but if our stock market do not have a lot of investor then we might have a problem.

First of all, I think the no contra rule have kill the market. Also overprotective of retail investors by the regulator deny the interest of speculators and funds or hot money coming into Singapore. I really think we should not be so protective. The market is dog eat dog world. It is unfair as retail investor will never have sufficient information and liquidity like the funds or hot money, but that is the market.

Read this


Yes we are safe, stable and predictable but that do not cook up the market. Imagine if there is little liquidity in the market, we can be very safe, stable and predictable but price of stock do not move or move very very slowly. It do not justify.
cheers

Monday, December 21, 2015

Xmas Crash


Hey Folk

Here we go, the FED finally rise interest rate after so long. It raise to 0.25-0.5%.They project to raise gradually to 1.375% by end of 2016. Historically when the FED hike rate it is good for the stock market. However, in theory (textbook) it should not be. Which is true to a certain extend.

School do not teach human behavior, that why a lot of us will missed many important point. Usually when the first rate hike after a prolonged low interest environment will encourage people to borrow more as they are afraid that the next rate hike will come and increase borrowing cost. The borrowed money are circulated in the economy thus making the stock market alive.

I think the market will start to be very shaky on the third rate hike. So far there is no sign that the market is going to crash. The bonds relationship are good, the yield curve relationship are good. There are significant buying from the big boys. Rally is in till year end and also start of next year.

Bingo on the market rally on the FED hike day.

I had long entered on Monday on the S&P, exited majority on Thursday and reenter long on Friday.
Sorry for the late post. This part just added. We are still in a uptrend. The drop on last thur and fri maybe due to most contract expiry altogether as is the last trading Friday of the year. FYI option expiry on every third fri of each month. At the same time there are many futures contract also expiry concurrently on the same day last week.
No more post till start of the year.


Cheer

Friday, December 11, 2015

Down or up


Hey Folk

Next week we will have the FOMC meeting on 15 and 16. I think the rate will rise on Wednesday which is on the 16. Stock market will rally.

This week I will use some charts to illustrate what is happening.

The S&P500

This is the monthly chart of the S&P500 we are looking for long term when we look at monthly chart.

The MACD are showing little divergent for the current up move, which mean it may turn to downward movement. ADX are also showing that there are no strength to the upside. However it can also be the case of the circled area in 2011. Where market still turn up.
Next the relationship in weeks between bonds and stock.

There is no sign of collapse in the bond market. Look at the fundamental, the COT, commercial are buying into bonds heavily. Which may translate that the bond market will go up higher. This may temporary depress the stock market a little ( I do not mean crash )but will lift the stock market up again due to the relationship. Study the chart carefully to find the relationship.

COT data for stock are showing buying activities. Yield curves have not shown a zero or negative gradient yet. So the up move in the stock market are still intact in my opinion.

Last chart, is the relationship since 1970s of US dollar, oil and gold.

Dollar rise will depress gold and oil. It happen in the 1980s. See the similarity we are now and 1981. Currently the 3 instruments are crossing each other in term of sigma. This further explain that gold and oil are having downward pressure. These also coincide with the raising interest rate in the 1980s period.

History never change because human never change. But history may not repeat itself in a timely fashion.

Cheer

Saturday, December 5, 2015

Year end forecast and discuss


Hey Folk

Announcement: Zurich Life in Singapore will ceased operation. They will only maintain existing business. No affect for all term and condition for all policies holder. Zurich had also transfer us to a Independent Financial Advisor where I can offer financial services from almost all companies. So is a better thing for me. Just awaiting to get all the coding from all the companies.

Economy and Market

The economy for next year is not going to be very fantastic. A lot of countries around the world are facing problems already. There are lower PMI recorded for all the emerging countries and Singapore as well. Russia is already in recession, Canada is on the brink of recession. Some of the country like Brazil and South Africa may sink into a Great Depression. 2016 would not be a easy year for the economy.

Our PM had already warned about this in Oct- Nov 2015 and I mentioned in my post. To reflect back many years ago when I am a student in NTU, I attended a seminar by the Late LKY. He warned about market top way ahead of the last crisis. I have to say I benefited from his seminar and alot in the crisis in 2008-09. So our people up there, they know their stuff.

Moreover, when interest rate rise this December, it will further drive USD up. Which may most certainly drive the already weaken commodities prices even lower. Usually the lowered commodities price will impact emerging market more as they are the producer’s countries. A lower than now commodities price will really affect those countries significantly.

Moreover, it will surely affect those weak holders on their properties purchased. A increase in rates it going to affect short term rate very quickly and in a significant scale which may force their installment rates to increase and hard to afford. This may lead to another force selling.

Let look at some oil stories


Take a look at this video of Bill Gates talking about renewable energy.

Courtesy from Gates Notes

Look at the chart above, demand of oil maybe way lower in decades to come. There are a few factors to consider.

1)    The world’s billionaires setting up funds to research on the renewable energy.

2)    The world now alerted on issue of global warming,

3)    OPEC have structural issue

My take is the world’s billionaires are trying to find a news source of energy so that in future they will be richer and more powerful. Remember how the oil companies and countries do it in the past, they are finding this opportunities. Also with global warming issues, many government are trying to do something about it. So it affect the oil companies.  

The other thing is in 2007 crisis, oil drop because of credit bubble. Now oil drop is because of structural problem. There are problems in the OPEC as well and many other reasons. Oil is deeply entrenched in a down trend. I had warned about it long ago using COT data. However, there is a significant lapse in the timeframe between news and the COT. COT data had already shown the collapse many months ago.

Stock market wise, there are no sign that the market is giving way. In fact a lot of big boys are buying. A lot of indicators, relationships, and fundamental have not shown that the market is coming off. They are still showing and reflecting a buy. I still think there will be a rally into the year end. Probably into early 2016 as well. These do not suggest that the up move will be daily. They will be down days. All these down days are buying opportunities.

Question why are there no selling but buying by the big boys if the economic situation mentioned above are so bad? Probably the big boys are buying to set up for a sell to retail investors. They want the market to go into euphoria, where a lot of people will participate in it. So they can distribute them to the late comers. They will cook up nice stories to attract buyers. While they will distribute their holdings for cash. Or maybe they have more advance news than us saying that things are actually better. Who knows.

The US market, German, Euro Stoxx index and China market are the better bet for the up move. The weaker market are all the emerging market and also Singapore.

 I will do a separate post on my take of 2016, I have not got enough data yet. Last year in 2014, I predicted that in 2015 will be a up year. Let see how it turn out.

Oil and Gold will still drop further. Maybe I do a hit and misses of mine records for the year as well.

There are people who ask me which sector that will be affected in Singapore market. They are the commodities companies and REITS. Slowly it will affect the property firm and the banks. Well for me I still prefer to deal with indices as there are regular activities and volatile enough.

Cheer

Sunday, November 29, 2015

Up Coming


Hey Folk

Next week a lot of of important data are coming out from the US and the EU region. They are going to dominate the market movement.

This week we have nothing much. However, let point to the incident where Turkey shot down Russian plane. The market did react for the day and then the next day things are back to normal again. I am observing that the market are more and more resilient to unexpected news that have regards to terror and fighting.

I still do believe that the FED this time round may rise interest rate. US and EU market are still a uptrend, Japan as well. However the rest of the market like Spore is downtrend. Emerging market performance are worst. I do believe that one fine day some crisis will happen again which lead the drop of all market. However, the time of it would not be so soon. It we take a 10 years cycle, it would be in 2017 to 2018 period.

Positions

Long the S&P500. Short EurUsd.

Short and sweet for this week

Cheer