Rally to fizzle and out?

STI continues its rally today. I’ve starting taking profit instead of adding to any of the positions, even clearing some slow movers at breakeven instead of holding out. My main concern? – The rally is going to fizzle out soon.

The fear is that the rally isn’t going at a slow and steady pace, but rather at a breakneck sort of speed, with some of the bluechip counters breaking through previous highs. While some may take this as a new upstart, I have my concerns rooted in the fundamentals of the economy. And while stats points to the equities market usually leading the economy by 4-5 months, the economy is NOT set to recover till end of the year at the least, with analysts calling for a even worse meltdown in 2010.

So on the safe side, it’s good to rake in the cash and go back to the observatory tower again.

What else could they write about?

It’s yet another hot, humid and scorching afternoon as I sit here at Starbucks @ Tanglin Mall sipping coffee and reading the papers.

“US manufacturing hit..”

“Singapore GDP worst in 7 years…”

“Job cuts hits China, India & Russia…”

It’s bad news time at the papers again. But I’m thinking at a time like this, what else could the journalists be writing?

But there turned out to be some interesting reads… Teh Hooi Ling on New Year Resolution is amusing and cheering, and James Saft talking about us all being in as a Madoff investor packs more brain than 80% of the paper contents.

All eyes really though, are probably on whether the rally will persist next week. I think?

Gearing up again as markets shrugs

Another reason for the market to open downwards in the US as ‘oil prices rise’ due to ’some attack some where’. Well, it’s hovering at a pathetic 37 dollars and if some financial journalist still has it in his or her head that there’s a correlation sufficient at this point to rattle the equities, it’s a bit of a daydream.

That’s probably the least of anyone’s concerns at this time. The markets are ‘maturing’ out from the head daze of the last few months. We’re facing up to the real mess – the giants that have failedd to hold up the pillars and foundations. So turn your attention over there, not to some  relics of yesterweek which is now at best, on the sidelines.

Ponder 2009.

Sorry for the lack of updates – with a temporary break from active trading, I’ve been diverting most of my time to my other pursuits. Trading activity is also waning, in spite of a brief  ‘rally’ that was quickly brought to a slow. So far, market indexes are still bouncing up and down, with scalpers and intraday players taking most of the pie.

Everyone’s expecting more contraction for world economies in H109, as well as currencies weakening with the dollar taking the lead. For me personally, 2008 has been an exciting year, as well as one packed full of lessons both within and without the markets.

So what might be coming up in 2009? Despite the bad news floating around, I believe we may have reach a temporary bottom at this stage. There seems to be a strong support for all indexes in the equity markets, after the major sell off in the middle and early Q4 of 2008. We may still see a sell off in the pipeline but downside risks are now at an attractive reward ratio for selected counters and instruments.

I’m already snapping up companies which are both set to ride in terms of business sense and management strategies, as well as showing a good amount of buying by others. The simple strategy remains key for me: let the price do the walking. There’s no better time than the coming months to take action, because we may see a swift recovery in the new year ahead.

All the best,

K.

A mixer

Teh Hooi Ling, one of my favourite local writer on finance and stocks, writes in an article on the Business Times weekend on the challenge of using any form of modelling to predict and forecast the markets. Among methods discussed were econometrics, physics and the likes. It’s quite a good statement and we see it in play – DOW rallied and closed positive 200 points, and STI follows suit with a strong 4.5% gain at half time, but HSI dips into the red (more probably due to profit taking and also as traders pull out of buying at the top).

Gains are tight at this point, and it’s better to clean some than have none at all.

Rollercoastie

Don’t you just love it when DOW does a stunt like this? Open spikes down and then recovers in no time to go positive? Gotta love the volatility. Better still, when it’s down, the headlines on Yahoo says ‘Stock dips as investors takes …’ and then when it’s up it changes to ‘Stocks rise as investor shrugs off…’

Ok, tell me something we can’t see with our eyes from the charts right? Guess not

Look at Golden Agriculture

The technicals for this STI listed commodity company looks interesting. There is a breach out of the down trend channel, and may signify a good long – mid term buy/long. I would wait to enter between 0.185 – 0.195. Given the volatility of the markets and the overall sentiment, I would put my stops at 0.165 – 0.17. I got a feeling this might run up very soon, but of course, there’s a 99% probability I’ll be wrong.

Is it a rally?

Some say yes, as markets advance with the DOW and stocks like Citigroup rally up almost 100% after hitting a low earlier on. I have heard some people already buying up here and there, as well as my own remisiers sending me messages about a rally in the next 2-3 months. Index wise, I’m still keeping a close look out, we’ve not exactly moved out of the channel, it seems to me another ping pong session. Your best bet is to keep an eye out on the volume as well as the technical lines, because a failure to overcome that will quickly erase any profits made. (The downside these days is higher than the upside)

For shortists, it’s time to wait again, don’t short into a rally (if your view is there is one happening at the moment). My pick of the season for value shoppers is to look into oversold commodities, as these will have a significant momentum once they start to roll again. Christmas is around the corner, play safe and keep some cash for the new year.

When times get bad.

I heard of some people asking for freebies. Asking for discounts. And even taking from 2nd hand goods and stuff that were meant to be donated to the poor. I’ve kept my peace for a while, but I’m about to break loose. I’ve heard of parents demanding money they’ve paid for their child’s education back. My big question is that these people are not beggar poor, but have a respectable job and even trade in the markets. Why?

But I realise that’s the reason why these people are POOR. Not beggar poor, but forever  destined to be limited in their growth of their wealth. Hoarders never get rich, or they get some but never be truly happy. Before you think I’m growing all philosophical, think about why are you trying to get rich? If it’s not for  someone, then my friend, pardon me for saying this but you’re truly going in the wrong direction.

If a parent slogs only to give not even the gift of education to their children, they slog in vain and they deserve every bit of the fatigue that life throws at them. Will having thousands in the bank bring  you security? Or owning stocks bring you status? I’m ruffled all right, and I pen this as a reminder to myself – the day will not come before these people I see in my circles make a wealth.

When times get bad, please be kind. Be giving, be glad and thankful. Don’t be a hoarder. Times are going to get bad, but they will recover. Hoarders get their soul rotten and perhaps never turn around.

There, I’m done now. Oh ya, and if you’re a hoarding stingy soul, pardon my entry here, I wasn’t expecting you to read this.

Now get the fuck out.

Setting up for festive shopping

The stage is almost set, just a little bit more to wait out before the shopping begins for me. HSI already close to breaking 12,000 – watch for 11,500 to see if we have a big slide or a weak dip. The same route applies to the regional indices as well. Watch for DOW, if it breaks further it will rival and surpass October lows. It will be good to wait for the probable breakdown, and widen our margin of safety before taking up longs in this market.