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

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

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

http://b-gat.es/1LSKfPF

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

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

Slow and steady

Hey Folk

I think it is quite clear that the FED is going to raise rate. After the Fed meeting minutes out on Wednesday the market went up. I think maybe the anticipation is ending soon so a more clear action can be seen. However, the question is how much the rate will rise.

We are in a uptrend in the US market, Euro Stoxx 50 and Nikkei. The rest of the market like STI, China and Hong Kong are still in a downtrend. This actually give us a very clear indication of the stronger and weaker market. So long the strongest and short the weakest.

Gold to me is a downtrend. If you read my posting before, you would have known that gold have a 30 years cycle and commodities tend to reverse to the mean. Gold is in the 15 year down cycle. 6 years have passed, so there is approximately another 9 more years to go. The good thing is gold will move quite slowly, so price will not collapse so fast. It take time to even reach 700.

Oil is another commodities that is in the process of reserving to the mean. This is a wilder instrument. They are quite volatile. Oil as well is in a downtrend.

Positions

I have got stop out in oil. Shorted the stock market this week. Long and profited on Sterling.

cheer

Shake shake

Hey Folk

We are back to a uptrend. The market is getting shaky again. After awhile you realise that the market will trend after a shaky or unsure period. So now is the unsure and shaky period again, so next the market will trend. When is the unsure period going to be over, is the golden question.

Confession, any indicators on a stock market is not as accurate as before. Back in the good old days, the stock market is much easier to predict. Now (to be exact after 2007-08 crisis) the market is getting harder and harder to foresee. The reason being stock market are more popular, there are more participant and all sort of account sizes. So too many cook spoil the broth. A lot of indicators works well in the commodities and FX region. To analysis the stock market, we have to use a lot of indicators from different perspectives to give a rather accurate findings. Yet these indicators have to be prioritize base on the assumed situations, none of the indicators are a permanent solution for the assumed situations.

However, one fact that has lasted for the test of times is that stock indices always goes up except Japan. Stock market ( referring to indices ) have a upwards bias. The other truth so far is the relationship with bond price.

I think the rate raise will come in December, unless somethings happen from now till then. I changed my stand is because I find that it is more of a political reason rather than a economic reason. Inflation is still low, if is rising, we will already see oil price rising. It is very vivid, we common man on the ground will know it. Example electric bill rise, gas we use for cooking rise, petrol price rise, soap, detergent, egg etc price will go up. However, all this did not happen.

This actually show that economic activities are slowing down. Remember a few weeks ago, I said that our PM say that be prepare for slow down. He never BS. They know things way ahead of us. So be prepared.

Positions

Liquid all my positions this week. Shorted gold again,

Look at suntec riets and Keppel reits. Good shorting candidate.

Asia and emerging market stock are much weaker. Take advantage of it.

cheer

Uptrend now

Hey Folk

Unemployment at 5%. A sign that is good for a small interest rate hike. Probably that is really happening in December.

We are back to uptrend in the stock market already. So now is loading more longs than shorts position. I do forsee a up move till the end of the year. Surely it would not be a straight line up. There will be pull backs and consolidation. Dooms sayer are caught once again. I do believe one fine day the market will come off and stay in bearish for 2-3 years, but now is not the time. I still think we have room to grow.

There are a lot of people out there saying that the market are bearish. I think they are my indicator as well. It tell me that if I do the opposite, I will be in profit.

Positions

I loaded up on USD this week. Look out for REITS for shorting. I am also looking at Alibaba.

Well this week nothing much. Until next time…..

cheer

Nice up run

Hey Folk

http://www.businesstimes.com.sg/government-economy/singapore-must-prepare-for-economic-slowdown-pm-lee-0

Read this article, Prime Minister said to prepare for slowdown in the economy. I consider this ‘insider information’. They have way ahead information than we have. So embrace, tighten your belt. Sometimes it maybe way ahead of what is actually going to happen. But it is very useful information.

Let go and see this http://www.federalreserve.gov/newsevents/press/monetary/20151028a.htm

Fed meeting ended on 28 Oct Wed. Read what they say. No rate raise yet. In my previous entries I had mention that no rate raise so fast. GDP 3^rd Qtr in the US missed forecast, pending home sales dropped too. Will they rise rate in December? Let see the inflation rate.

Next let go into a COT chart so maybe we will be in sync

This is a weekly COT chart VS weekly Oil price

Red is the commercial aka the Big Boys. Blue is the funds. Green are the retail traders. Weekly price of oil is in black.

In 2011:

The commercial build up their long position about since the second quarter of 2011, buying when the oil price dip. Oil price went up again in about the second quarter of 2012,

Notice that the small speculator or retail are extreme seller when the price are low and extreme buyer when the price peaked.

In 2013:

Somewhat the same happen in second quarter of 2013, commercial max buyer and retailer max seller, and the price went up.

In 2014:

Notice in start of 2014, the commercial are shorting, they are shorting it for about 6 months, before the price of oil came off and stay down for the next one year.

At the same time, the small speculator or the retail in green are at extreme buying at the start of 2014, oil price went up abit and the retail sold. Then they are back to extreme buying again when the oil price is peaking while the commercial still are at extreme selling.

Now

Commercial are extreme seller, however the retail are selling into it as well. So there is not a ideal setup on the COT. We see price of oil rally on Wednesday night.

Positions

As the COT suggest from last week post, I am still short on EurUsd and took a good profit. This week COT suggest a good short setup for Gold. I am in too. I also still hold long position in the S&P500 and took profit. We are still in a downtrend in the stock market. On Friday it had a outside bar that close negative. This can’t confirm anything yet. Let wait and see.

Singapore stock wise, start to look at REITS. Not to buy but to short sell. Capital commercial trust, Suntec, Cambridge are in my list.

cheer

Some entries

Hey Folk

This is going to be a short one due to my travel schedule.

Past few weeks I am talking about the possible rise in the stock market. Here we are!!! I long the stock market on different price for quick trade. Net profit so far.

I had shorted EurUsd and AudUsd.

AudUsd I only make a scratch. As of now there is not a ideal COT setup for AudUsd yet, but let see this week.

 EurUsd has good COT setup for a sell last week. On Thursday( yesterday ) EurUsd had already down 200 plus pips from the open, so let it rest before the next entry

Next there are COT setup for Gold to short. Let wait for the price to be ready for the entry.

Oil too have a setup on the COT ( not a ideal one), let the price be ready for a short entry and let see the COT for this week. Last week I said that oil may have a big rebound, it still true. That maybe explain why the price are not ready for selling and the COT to sell is not ideal.

Trend is still down on the weekly in the stock market despite the market spike up. It is a uptrend on the daily already. No clear indication yet. It is more of a trading environment lately. May the trend be clearer.

**Pls note COT is not a timing indicator. It just tell us the next big trend. Seeing extreme sell in COT by the Big Boys this week do not mean that price will collapse immediately. Sometimes it take months for the price to realize and when the price realized, usually they will stay entrenched in that direction for sometimes.

Stay the same in your funds.

cheer

Showing some light

Hey Folk

We are approaching the seasonal low due in end of Oct which mean traditionally by end of October the market will rise. This time we have Fed meeting on the 27 and 28 of October, maybe this will be the catalysis. Also the earning season is in again, maybe this will lift the market up.

The COT data shows heavy buyer for many weeks several weeks ago. They are still heavy buyer last week. If we map them together, probably we have some hint on where the market is going. However, what I do not like is we are still in a down trend. So be nimble on the long position

I had spent every on finding a better way to determine trend in a faster way with high accuracy. However, I have not found one that has a higher hit rate and also a huge lift off when the trend change than the current one I am using. For sure my current methodology do not allow me to catch the bottom and the top. I also believe there is no such method that one can identify the top or bottom and profit from the market instantly and handsomely. Alright let get into the market.

Another things to look out for in the market is crude oil. Crude is a indicator of how well the economy is doing. A low price in crude oil mean the economy is not doing well. I mean economy and not the stock market. In the present world they are not in sync anymore.

Below is the weekly chart of crude oil

 

Notice where the cursor is at 53.95. I think crude oil is going to have a rebound to that range. Which mean to say high 53 to low 54 level. Also notice that crude oil trend is down. This is a deeply entrenched downtrend. So be nimble on your long position, if you wish to do a counter trend trade.

Stay the same in your funds. There is nothing to do yet but seem better than last week.

Short and sweet

Dilemma

Hey Folk

I came across this very interesting video by CNBC. They interviewed the former Fed chairman Bernanke. Please pay attention to what he said for the whole length of video and particularly on 40 second to about 58 second.

http://video.cnbc.com/gallery/?video=3000428960

40 to 58 second obviously tell us that these people, investment bankers, government, sovereign wealth fund etc knew things that we common people do not know. I wrote this before, saying that my personal experience with these people is that they know things way ahead the news are release. So they will have already be in the market. When the news released, common people will come in and buy or sell a position that the smart money do not want. So in other words we take the goods they do not want and give them the money. That is why again in the COT, the small speculator or the others are always in the wrong direction. Also news are extremely lagging.

Most of the time we try to second guess or think that the policy maker or some bosses made a dumb ass choice or decision. But slowly I realize that I think they know exactly what they are doing. The reason we do not get it is that we do not know the real reason behind what they are doing. Things always make sense once you know all the facts, even if is not to our liking. But what I know is I do not know what the real reason is and I do know that we do not know the truth.

China

In the video, Bernanke also said that the stock market in China and the economy have no linked. I cannot remember where and when, I read this from our local newspaper saying this as well. The economy in China is doing a transformation, all transformation have certain shake up thus the stock market had a dive. Having said all these are useless now as things already happened. So for me, the COT, seasonal, relations and trend are still my best tell signs of where the money is going.

Russia

Their economy are greatly hit since the Ukraine incident. Now they are in the middle east. The shocking part is nobodies know how on earth they transport fighter jets and tanks into there. They are so stealth. I think the fact is I do not think they are there to fight the IS. They are there to restore their economy.

By helping these countries except Saudi, they can come in talk about the production of oil. If they can cut the supply of oil, they most likely can let the price of oil increase. Which in a way will save the dying economy of Russia.

What I believe/ my opinion (may be dead wrong)

We are entering into a slow growth pace globally. Since the Fed is not printing money and coming into the market, the market had lost it artificial simulator. Thus the upward thrust movement of the market will not be as spectacular as the previous years. We are still in a 0 inflation environment which tell us very vividly that there are no spending activities. A lot of money are lock up and kept in stash. I really hope that the US would not go into a deflation like Japan. If so, the whole globe will most likely to suffer a extreme slow growth, which surely impact all individual life. I also think because of this the interest rate would not rise.

We are in a downtrend. But we have not break the low created on Aug 2015 and most importantly Oct 2014 lows. I see very strong buys in the COT, slight divergent of relationships between sectors. If you are trading, I guess is best to stay sideline until the coast is clearer.

There is still no need to change fund yet. We are still within a big range.

Untill next time….

Stacking the odds

Hey folk

Yesterday we saw a huge rebound on the intraday. Something promising???

Here we go, the disaggregated futures only COT on a 6 months comparison VS the weekly close price on the S&P500.

The important details to watch is the Net dealer in red, net others in green and the weekly close price of S&P500 in black. The net dealer are the biggest fund in this market. They can be government, national bank etc. The net others are the retails trader like us.

 The graph tabulate 2015 data, we can see that the net dealer are accumulating since the start of the year. The net others just pay attention to them, they are always catching the wrong direction. When the market is down in late March, they are long, when the market is at highest in mid May, they are short. When the market is falling in August, net others are long. When the market is falling more, they buy more.

So we can see that the retails trader are usually wrong, that why 95% of the participant lost money. The money they lost goes to the 5% which are the net dealer. So from here we need to watch this 2 category and we may roughly know where the big trend is heading.

Next we look at the other Net COT.

 

 

 

 

The graph is the Net COT VS S&P500 weekly close

We need to pay attention to the Comm net in red, the small spec net in green and the S&P500 weekly closing price in black. The comm net is the biggest fund and the small spec net are the retails trader.

Is obvious that the accumulation by the comm net is getting much higher, and is the highest since the start of the year as the weekly price fall. While the small spec net is trying very hard to catch the trend but fail most of the time.

From the above 2 fundamental data, the big boys are accumulating the market very heavily as the price comes off lower. That why in the last week whasapp, I did add on that buyers might be in the market. Bear in mind that COT is not a timing indicator, it only tell us where the big boys and the smart money are moving where the big trend will happen.

However the big boys can be hedgers at time. So much effort needed to spend on crunching these data further to determine their holdings. Other than the above 2 charts I still have 3 more using COT to analysis the positioning. Thus on the last post I said that we need a lot of effort to know what is happening in the market.

Anyway, currently we have net longs by the big boys. Seasonal are telling us that end of October is a buy point, it also tell us that year ending with 5 is a up year. But the weekly price is a downtrend still. Follow the price. Price rules!! Net Net no change of funds yet until further notice.

 

cheers

 

 

 

Let get statistic

Hey Folk

The market is indeed real choppy. It seems like everyone is waiting for the talk by Fed chairwoman on Thursday morning Singapore time. She said that they see rates rise by end of the year. We are left with Oct, Nov and Dec for the year. As I said in the previous post, the anticipation will still be in the market, which leads to uncertainty. We see more swings in the market day to day, the range are wider than normal. Like I said we are in a downtrend already since the week of 7 Sept 2015. However we are still bounded in a big range from 2100 to 1830 which is about 270 points boundary in the S&P500. You will also notice this in almost all the indices.

Let look into some statistic

On the left there is a S&P500 cycle base on 30 years. Notice that the volatility increase towards Oct. and then it will dash right up. On the right we had a 4 years cycle. We are in the pre election term now. Notice again there is drop in the last quarter then market will move up.

Next

The years ending with 5 is usually a up year.

These are statistic for reference. We cant follow them like a theory or formula that sure works.As I said before, price in the market rules, now it is a down trend so short more than long.I did short on 18 and 23 of Sept. Hold for 2 days and the other an intraday trade respectively. I made some little profit.  Market are still in a range and volatile, go for fast in fast out.

If you wish to look at Singapore stocks for bottom buy, look out for Singtel, Starhub and SPH. However I wont be a buyer until my indicators tell me is a uptrend in the general market and that individual stock as well.

Trading/Investment

95% lose money and 5% make money. I think this equation is very true. Out of the 95% some will quit but there will sure be fresh participant coming into the market to replace. Let make the assumuption that the 5% that make money are consistent. Consistent mean 5 years and above having profit yearly. Out of this group, to be above average is to get a 10% profit yearly. To be the crème is to have 30-50% profit yearly. To be the best of the best is to have anything above 50% yearly.

So isn’t Trading/investment real boring. It is not to get rich quick. It is quite confirm that in any casino games or buying 4D or toto have a higher chance, better potential and relative lesser effort to get rich quick. Trading is purely having a plan and stick to a plan. Sometimes I only have 5 trading signal for the entire year for a particular instrument. I just have to wait.

Successful traders just have to follow a set of rules that work year after year and nothing else. A lot of people that I know just wish to get rich and not wanting to know the process. This market in my view has made many participant believe that one can get rich or do well with little effort or knowledge. Also since there is no formal education on how the market works, a lot of participant went into the market without any knowledge and not even knowing their approach is entirely wrong. Please do not hear say if you wish to be serious about this industry. If you just wish to invest or trade to make money without making any effort, the least you can do is to entrust some funds to do it. I may have other plans coming out for interested traders.

cheers

No rise in rate.Uncertain

Hey Folk

I did some forecasting last few post that the Fed wont rise the rate. Indeed they did not rise. The unemployment is hitting a low, but there is visibly no inflation. I guess a lot of companies are keeping money in their stash, not willing to spend.

This move by Fed of no rising the rates ( in my opinion) also come from international pressure. The world is having ‘QE’ one way of the other. So having to rise interest rate too fast would not be favorable.

This will also result in the market having lesser urgency to determine the direction as there are presence of anticipation. However, for the stock market, base on seasonal is still a down move till October where the up move will be in. Remember that year ending with 5 is a up year for as long as the seasonal tendency have exist but maybe this year we will break the pattern. Well wait and see. Nothing last forever.

Look at the actual data of the unemployment rate in the US.

Year	Jan	Feb	Mar	Apr	May	Jun	Jul	Aug	Sep	Oct	Nov	Dec
2005	5.3	5.4	5.2	5.2	5.1	5.0	5.0	4.9	5.0	5.0	5.0	4.9
2006	4.7	4.8	4.7	4.7	4.6	4.6	4.7	4.7	4.5	4.4	4.5	4.4
2007	4.6	4.5	4.4	4.5	4.4	4.6	4.7	4.6	4.7	4.7	4.7	5.0
2008	5.0	4.9	5.1	5.0	5.4	5.6	5.8	6.1	6.1	6.5	6.8	7.3
2009	7.8	8.3	8.7	9.0	9.4	9.5	9.5	9.6	9.8	10.0	9.9	9.9
2010	9.8	9.8	9.9	9.9	9.6	9.4	9.4	9.5	9.5	9.4	9.8	9.3
2011	9.2	9.0	9.0	9.1	9.0	9.1	9.0	9.0	9.0	8.8	8.6	8.5
2012	8.3	8.3	8.2	8.2	8.2	8.2	8.2	8.0	7.8	7.8	7.7	7.9
2013	8.0	7.7	7.5	7.6	7.5	7.5	7.3	7.2	7.2	7.2	7.0	6.7
2014	6.6	6.7	6.6	6.2	6.3	6.1	6.2	6.1	5.9	5.7	5.8	5.6
2015	5.7	5.5	5.5	5.4	5.5	5.3	5.3	5.1

Table of % of unemployment in US

If you plot them on the graph, since 2010, there is a consistent drop on the unemployment. However, there is also a consistent drop in inflation too. The current inflation is at 0.2% now. Fed aim is that inflation in the long run can maintain at 2%. That is 10 times more than the current rate of inflation. So hang on tight for this period of time where volatilely will increase with much anticipation of the rise in rates.

My take is since on the weekly is on the downtrend and the COT have show negative holding in the big boys, I would be a seller more than a buyer. However, we are still bounded in a range, so be careful. Not just stock market. All other instrument like commodities and forex are in the undecided zone.

cheers