Up and up....when days are good is time to.....ummmm

Hey Folk

Last post I talk about the year 7 or also known as the famous 10 years cycle have reached. The S&P 500 10 years cycle show that year ending with 7 usually have a dropped in the 3^rd to 4 qtr.

Coincidently, next year is also known as the post election year. The data for post election year also shows that there will be a dropped in the 3^rd to 4 th qtr.

The 10 years cycle and the election cycle also show that there is a rally coming up right after the US presidential election.

As mention, this is a guide and just take it as a guide. The market is following these cycles quite closely now. So they may happen.

Commitment of traders

On Christmas eve when data are collected, I do see lots of big players eg the government or huge funds are loading up on the stock market. I do wish to see if these phenomenon continues and also that the retail players are continuing selling or shorting the stock market. If these carry on for weeks to come that mean the stock market is a buy that will last awhile.

Accumulation/Distribution

The accumulation is slightly leading the price of the stock market. Which is a good sign that price will propel upwards.

Price relationship

There are divergent in many indicators. We do need to pay attention to them if these things continue.

As of Christmas eve, a semiconductor ETF that always forefront the move of stock market are at the new high. Russell are near the new high. These again suggest that stock market will rally further.

Bonds market are hammered. But price has stabilize. Which mean price of stock market may correct soon.

Bonds yield are still having a positive gradient, but more distorted now. It shape more like a S than a linear line. These show that stock market are set to propel but we may need to be cautious on the long run.

Price action wise is bullish for the US stock market and DAX. Hong Kong, SSE and STI are the less bullish market. SSE is shaking up and trying to evolve into a ‘real dragon’ with their one belt one road idea that make them to be the world trade hub.

One of the key thing about stock market is, it is upward bias. If you do enough backtesting and you will find that the most reliable way to certify when the stock market is having a huge drop is when the stock market proofed that they are doing so. How to certify, is with all the relationships and all that I mention above and breaking of pivot points. So until proven wrong the market is in the upwards trend.

*PS this is more of my opinion. Everyone is talking about how bad our Singapore economy is. Is like the end of the world. Stock market wont do well. But I think that everyone is wrong. I totally believe that for mid term to long term we are facing tons of trouble. But for now STI may soar much higher. But this is sincerely just my opinion.

For funds holder, probably you may like to keep them into China and US. These 2 markets will make a good run for passive investing.

Anyway, as usual, I may be wrong. So do not take all these outright. Good luck good health and good wealth for the year ahead.

Cheer

Rate Raised, One belt one road dream

Hey Folk

Rate raise is back.

Rate raise again. A lot of companies have a better cash flow and balance sheet than before. So right now I have a 0.5% rise in rate, do you really think it will affect all these companies tremendously?

I do not think that these will drastically affect any companies as they have enough to spare and are prepared for that.

With the rate raise, I think investors will take advantage of taking profit on USD and later load back in.

For Najib country goers, I had some discussion and research suggesting SGD/MYR may go to 3.4.

One belt One Road

Let take a look at the world map and see the one belt one road ambitions of the Republic of China.

You can clearly see that there will be roads or railway connecting China to every parts of the world. These will shorten time of transport. Also in my opinion by pass the strategic port of Singapore as we become not that relevant in term of a port. So invest in China. CSI 300 or China A50. These will sure bring cai yuan gun gun (hanyu pingying)

There is a 10 years cycle of stock market downturn and it should happen on the next year. Cycles are a guide and not a formula. As of now I believe in the cycle and also believe that market still have rooms to rise further.

I maybe wrong. Time will tell.

Cheer

Triumphant China

Hey Folk

So far I am so right about the market. US market soar. China market Soar. Whoever have funds in your policies or own funds in those area….Congratz.

Let talk about Trump

Businessman that wish to make America Great again. His fiscal stimulus lead to bond price lowering, stock price to move higher and increase inflation. Lay man term is he spend money within his country to build facilities like road, railway, builidngs, refurbish old builidngs etc etc….some sort like in SG, we always see them dig things on the road and make the road newer.

These will improve employment, with improve employment people are more willing to spend and thus increase inflation. But these will increase tons of debt to their own country. But they are a big country and leader of the world (slowly will not be so significant), so they can do this.

Slowly after these are done, they will still need to look outwards of their country but depend on who is the next president to play the game. It is always like that for many civilization in history.

China, Capitalism or communism??

A last time inward looking country now turning outwards. They are flexing all money they have like the obnoxious friend, throwing money at any country that are willing to work with them.

They wants to be the leader and this is their chance. The one belt one road if successful will be awesomely magnificent plan. They will practically connect the world to them. The plan is extremely ambitious. But being Chinese, I know they can do it. It just take time and determination and they will make it happen.

China in the olden days, (cant remember which dynasty) have the largest GDP in the world and are the richest. The Chinese know the power of unity.

They are too shaking up their internal problems and extending economic growth to the world. It take time but they will do it. Also being Chinese myself, I do believe that in business they are selfish. In hardship we can thrive and endure together, but in fortune is only mine. I do see some of these playing out in China and Singapore relationship. Just my opinion.

These are the advantage of big countries with huge population and sheer land mass and resource. Honestly, however miracle Singapore is, we cant do that. Unless we can be the next Silicon Valley as the GDP of just that state is among the top in the world.  I love this place but let be realistic and think about it.

I was having a conversation with some friends and I said our grandfather migrate from China to escape war and to find a better future for themselves. I think there will be a day that our grandson will need to migrate back to China or other places in Asia to look for better future.

So in short. For funds wise stay in US and China. They are the better ones. The rest will be follower. These 2 areas might bring enough money for us to relax one corner.

one more thing, that is I do think facebook, alphabet and tesla will have a very good future. if spacex is listed it would be too.

Cheer

Compare and Conclude

Hey Folk

Let do some stock indices comparison.

First we have the Shanghai Composite (SSE) VS S&P500

The above picture is a 10 years data.

You can see that SSE have a better performance than S&P500. If you invest 10 years ago 1 Sept 2006 till 31 Aug 2016, you will profit 90% for SSE and 68% for S&P500.

SSE perform better than the S&P500, but note that the new high created in 2007 in the SSE is not taken out. So it is not a perpetual uptrend yet unlike the S&P500.

S&P has taken the time of test to perform for many decades. You can look it up from google. SSE is a relatively new market and have not perform so well too. Looking back into 2000 till now, SSE usually have a ‘burst’ movement which mean they will have extreme expansion for a couple of years and then slump for many years in other words is extreme volatile. But for these 10 years, if you invest in SSE, you almost double your investment. Maybe they will be the next star.

Let see the next comparison

S&P500 VS Hang Seng index (HSI)

The above picture is a 10 years data.

HSI is performing at 35% while S&P500 is at 68%

 The last comparison

S&P500 ETF ( SPY) VS Straits time index ETF (EWS)

The above picture is a 10 years data.

Why ETF? There are no data on google for STI. So I got to use ETF. Note that ETF can be directly invested and have charges, thus the return for the same period is lower.

For 10 years, SPY have 67.9% while EWS have 19.9%. I am quite sad about this as Singapore market is always such a lagger.

Zoom into the picture in the year 2015 and 2016, when the SPY come off abit, the EWS elaborate it but the other way up is not like that.

If you have a chance to google it yourself these 2 ETF and compare them to the maximum duration, you will realize that STI is always lagging. These pictures above take reference from 1 Sept 2006 as the start of comparison. So you might see certain expansion that is exaggerating. If you compare them longer, you realize S&P are always the leader.

Another thing about the stock market are they are correlated. They move in synchronous.

However only S&P right now created historical new high but the rest of the other indices have not. This show the strength of S&P and the weakness of others.

Jobs data was bad yesterday, rate raise anot 2 weeks later? Stock market maintain the pose.

For Gold Bug, I still do not think gold will go back up, probably it will rebound to 1500. But still I am bearish on Gold

Cheers

Herding or Sheparding

Hey Folk

Price rules once again in the US market, there show a divergent in indicator Vs price. Indicator are showing that price should go down. Price on the other hand just keep moving up. So that why we see S&P500 making historical high again.

Will there be lesser upside if an indices moved to historical high?

The answer to this is no. No statistical proven that this has happen. What went high can go higher and what go low can go lower. These happen during certain period of time. Honestly there is no indication in the fundamental data that I have that a huge drop is coming. These data actually show and support the up move and further up move. But I do think a dips or consolidation should take place.

Seasonal trend?

Traditionally these period into Sept will have wild market swing in a consolidation range. Then into October is when the market will start to have up lift. This is just a guide so do not follow it like a holy grail.

Asia

The up lift in the market will be a global issue. The strongest market will move and bring the weaker ones along. China in my analysis will bottom soon and should be the next engine in the equity area.

Why actually market goes up these question had a lot of people asking me. If I had to answer them the right way I will say that the global economy are turning better. It is slow but there are slow progression. There is a US election coming up in Nov so chances are the market will move higher.

The real and right way that is in my own reasoning and I see from my data and indicators are there are lots of buying going on. More retails account are selling or shorting. The big boys on the other hand are accumulating since the start of the year. Knowing the real reason do know fetch you profit. Knowing what they are doing does.

Gold

I do see that gold will come off. But it is in a no mans zone now. More to the upside in price. But fundamental data totally do not support this price. I do see more retail buying and the big boys are selling.

In investing that I know and learnt is do not follow the herd. Usually following the herd do know get you anywhere. However the Shepard is always the one that divert the herd to the desire place. Follow the shepard but don't trust the shepard. Because sometime we need to know when not to follow a person too closely, when to let go. The trick is how to differential a herd or shepard and how to differential when shepard is killing other shepard.

Cheer

Historical high 2

Hey Folk

Part 2 of it.

Let look at Dow Jones Industrial from yahoo finance

It had already form historical high. Now is about 18,500. Probably it will pass the psychology 20,000 mark. Which is about another 10% for 3 to 6 mths.

Next look at the line that is drawn, the start of the line happen about in 2011. (This is a illustration base on me and my peers age. We graduate about 2010, working for 6mth to a year and have enough saving to invest. )
At that point of time, Dow Jones is about 11,000. Over 6 years till to date, if you invest in Dow Jones you will have a profit of 68%. Just putting your money to work. There are shorter term technique to capture good gains but that need a lot of effort. So if you think thats too much effort and  is not your cup of tea, just find something good and invest in them.

Next STI from yahoo finance

It clearly has not break the historical high of 3805 created in Oct 2007. Now it is 2928. It is clearly a lagger. If you have invested at the start of the line that I drew, it is about end of 2010 which is about 2750. For 6 years, you only had a profit of about 7%. Compare that with Dow Jones of 68%.

Even if before the Lehman Crisis you buy into Dow Jones at 13,930 VS STI at 3805 ( these are historical high price in 2007) . For Dow, one will have a profit of 32.8% while for STI one will have a lost of 23%. These scenario actually happen to a lot of older folk that buy into CPF investment or any other forms of investment during that period of time.

So

1) Invest in a good horse. Easiest to identify is to compare throughout the  breadth eg same industry and get the best.

2) Conditions will change as time. When condition change leader and trend will be changed.

There is no one regime/ruler/party that rule forever, there is no one era the same, there is no one idea that stay forever. Even for a family, you cant keep your children by your side forever. Most of the time is when the best of the best happen and these best usually become a history.

Look for the condition that will displace the current leader, when the condition occur look for another runner. Now the US market is the leader, will it change to Asia market one day?? Look for that condition.

Also lots of data are publicly available from yahoo and google. One can pluck them and do loads of research on it.

Till next time

Cheers

Historical high

Hey Folk

Quick and dirty. Market are bullish. So many things happened and is going to happen but is ok. it is a BUY as of now.

This is Nasdaq Composite from yahoo finance

The line that I drawn is the historical high created in 2015. It is about 5200+. Now Nasdaq is about 5000. I do think that it can storm pass that historical high. As Nasdaq is suppose to be the leader of the leader of all market, one can use this as an example to calculate roughly where to profit take. The horizon for now is about 3-6mths. Where exactly will it land is a billion dollar question. This can only serve as a guide.

Taking bond and stock relationship as another guide. The bond market had make new high again and again. So if stock are lagger and it follow the bond movement, it may too have these phenomenon.

Another indicator, taking the week advance stock vs decline stock,( this indicator usually is use to pick the top) are showing that it is supporting stock up move.

Another indicator, VIX have show buy on the 3rd day after Brexit which I follow till today. VIX not showing anything else as of now.

Talking about S&P500, is a weekly uptrend but most of the technical indicator are showing divergent and overbought so becarful. But this do appear in extended up run.

However the run is Pls do exercise due diligence and proper money management.

quote from  Jesse Livermore 'The market does not beat them. They beat themselves, because though they have brains they cannot sit tight'

quote from Soros 'If investing is entertaining, if you’re having fun, you’re probably not making any money. Good investing is boring'

cheers