The Bears' Checklist
US earning period so far had shown extraordinary results on the major companies' performances but the this April, the DJIA had been underperforming so far. Even companies which announced good results were met with profit taking rather than appreciation in prices. The market had suddenly decided to give up support for these companies.
Recent US economic data had been mixed while underlying trend still remain positive despite losing some momentum. The question on investors' mind would be if the effect of QE2 has been over and done with. Fed Reserve also did not introduce QE3.
On the Europe side, the German DAX and French CAC initially dropped 3% and 2.3% respectively on a negative data that was of medium importance. Perhaps the market feared that the index will eventually lose its bearishness, news of Dutch government collapsing came out. The involvement of Dutch was pretty much unheard of in the last Europe crisis. Maybe, this goes to show that PIIGS are recovering and the market had to find other news to bring the market. ECB also hinted that bond-buy programme will cease.
Even China had not been spared as the SSE and HSI dropped 0.72% and 1.84% despite China PMI data shows improvement.
On the chart, DJIA has somewhat formed a potential "fat head" and shoulder formation with some might say the "fat head" looks like a triple top formation. On the upcoming right shoulder, a potential downward channel seems to be forming, and currently DJIA had retreated from this channel resistance. My beloved 50MA indicator, although still positive, had been uprising for sometime and now losing some strength.
Where is the bulls' checklist?
Monday, April 23, 2012
Sunday, April 8, 2012
Weekly Comment on the US and SG market (08/04/2012)
Market Correction or Buying Into Earnings?
Last week was the bumpy ride into the stock market with DJIA posting one of the biggest drop in 2012. The reason (or blame) was Fed Reserve did not expect to come out with QE3 and subsequently Spain's lacklustre bond demand pulled the trigger. On Friday, Non-Farm Employment Change figures dropped and were below expectation, sending the easily manipulated futures down over 100 points.
Fed Reserve's comments on QE3 should not be taken as an indication that the economy going to turn down. I noticed something that Fed Reserve Chairman Ben Bernanke's speech that seems to imply that he is looking at another indication before introducing QE3. QE1 and QE2 were directly to due with US recession and double-dipped recession respectively. However, this time round, the Fed Reserve seems to focus on US unemployment. This also send another message, that is Fed Reserve is quite happy with current US economy recovery, they need to focus on unemployment now.
I took a look at past year data. Stock market usually closed higher in end-April than in beginning-April. It also happened during year 2008. Will this year be the same?
Last week was the bumpy ride into the stock market with DJIA posting one of the biggest drop in 2012. The reason (or blame) was Fed Reserve did not expect to come out with QE3 and subsequently Spain's lacklustre bond demand pulled the trigger. On Friday, Non-Farm Employment Change figures dropped and were below expectation, sending the easily manipulated futures down over 100 points.
Fed Reserve's comments on QE3 should not be taken as an indication that the economy going to turn down. I noticed something that Fed Reserve Chairman Ben Bernanke's speech that seems to imply that he is looking at another indication before introducing QE3. QE1 and QE2 were directly to due with US recession and double-dipped recession respectively. However, this time round, the Fed Reserve seems to focus on US unemployment. This also send another message, that is Fed Reserve is quite happy with current US economy recovery, they need to focus on unemployment now.
I took a look at past year data. Stock market usually closed higher in end-April than in beginning-April. It also happened during year 2008. Will this year be the same?
Tuesday, March 27, 2012
Weekly Comment on the US and SG market (27/03/2012)
Positive US Economic Data Is A Given, Earnings To Be In Play
For the past few months, US economy has shown much improvements and the market has also been suppotive to equity prices. At this moment, even though weekly data may not need expectation or even take a step or two back, the market is unlikely to take it badly and sell the market heavily. But given that positive economic data may not move the market either, is the market going to enter into a correction?
For the past 2 years, the market entered into a slight correction around March after full year earnings had been reported. But this year it did not happen as the market recovered from the Europe crisis. Now we are entering into April when the 1st quarter 2012 earnings will soon be released. Therefore I see there is limited downside. Buying in anticipation for good earnings is likely the last ride investors can get on.
For the past few months, US economy has shown much improvements and the market has also been suppotive to equity prices. At this moment, even though weekly data may not need expectation or even take a step or two back, the market is unlikely to take it badly and sell the market heavily. But given that positive economic data may not move the market either, is the market going to enter into a correction?
For the past 2 years, the market entered into a slight correction around March after full year earnings had been reported. But this year it did not happen as the market recovered from the Europe crisis. Now we are entering into April when the 1st quarter 2012 earnings will soon be released. Therefore I see there is limited downside. Buying in anticipation for good earnings is likely the last ride investors can get on.
Monday, March 19, 2012
Weekly Comment on the US and SG market (19/03/2012)
Bears Subdued
For the past 2 or 3 weeks, the market has been anxiously looking at whether DJIA can hold at 13,000 (or 13,050 which was my resistance level). At that time many funds had been caught off guard and had not purchased stocks. When the market dropped 200+ pts on the 6th of March, many thought the market had started to correct, only find out it actually recovered the next day onwards and made a breakout of 13,000 pts. Some news were reporting that the breakout was of low volume and therefore implied that the breakout might be unsustainable. However, I thought otherwise.
Early Birds Got Lucky
On the 13th of March, DJIA made its breakout. It was a breakout with low volume. What happened that day was JPM unexpectedly announced that it had passed the Fed stress test and other banks went along to report the same. The market was thinking that DJIA was unable to breakout of 13,000 pts and thus did not place prices above that level. When JPM (and other banks) made the unexpected announcement, traders bought shares all the way up and above 13,000. With few sellers, it was easy to push the DJIA up. Of course, few sellers meant those who bought earlier probably still held on to their shares and rode through the rally. There was really no hurry to take profits.
On the 7th of Feb, I wrote an article to recommend JPM and Citigroup. The next few days, Citigroup was traded lower with the highest at US$34.74 and lowest at US$31.07. Currently Citigroup is trading at US$37.55. JPM was also another good stock, from US$38 to a current price of US$44.61. I hope for those of you who followed my articles, you are one of the early birds.
For the past 2 or 3 weeks, the market has been anxiously looking at whether DJIA can hold at 13,000 (or 13,050 which was my resistance level). At that time many funds had been caught off guard and had not purchased stocks. When the market dropped 200+ pts on the 6th of March, many thought the market had started to correct, only find out it actually recovered the next day onwards and made a breakout of 13,000 pts. Some news were reporting that the breakout was of low volume and therefore implied that the breakout might be unsustainable. However, I thought otherwise.
Early Birds Got Lucky
On the 13th of March, DJIA made its breakout. It was a breakout with low volume. What happened that day was JPM unexpectedly announced that it had passed the Fed stress test and other banks went along to report the same. The market was thinking that DJIA was unable to breakout of 13,000 pts and thus did not place prices above that level. When JPM (and other banks) made the unexpected announcement, traders bought shares all the way up and above 13,000. With few sellers, it was easy to push the DJIA up. Of course, few sellers meant those who bought earlier probably still held on to their shares and rode through the rally. There was really no hurry to take profits.
On the 7th of Feb, I wrote an article to recommend JPM and Citigroup. The next few days, Citigroup was traded lower with the highest at US$34.74 and lowest at US$31.07. Currently Citigroup is trading at US$37.55. JPM was also another good stock, from US$38 to a current price of US$44.61. I hope for those of you who followed my articles, you are one of the early birds.
Monday, March 12, 2012
Weekly Comment on the US and SG market (12/03/2012)
Staying Focus on US Economy, But Cautious on Oil
These few weeks, my family had been going through a roller coaster ride as my Dad fought with cancer and bacteria infection. Hedid not pull through. I wasn't quite motivated to write or post anything on my blog and I spent some time with my family. And after we had settled his funeral, I decided that it is time to I should make peace with myself and write my blog again.
The market is an interesting place. When DJIA approached 13,000 pts, a psychological resistance level, the news agencies were reporting that DJIA is unlikely to break this level. While the market was looking at 13,000 pts, I was actually looking at 13,050 pts. Although 13,050 is not far from 13,000 traders/investors who bought on 28th Feb, when DJIA closed at 13,005, a breakout from 13,000 would be disappointed to know that DJIA actually hit highest at 13,056 the next day and it went down subsequently. So why 13,050 and not 13,000? The reason is if we trace back to the market crashed in 2008, it tried to recover in Apr and form a "double top" formation, closing highest at 13,058 before it crashed further.
Having said the above, am I bearish in the market? No, at least not yet. As stated in my previous post, some funds have missed out the ride and waiting to buy if the market retreats. This explains why on 6th Mar when DJIA dropped 200 points, it climbed back. Another reason is 50MA is still uptrend. Some stocks are still trying to catch up with DJIA and showing bullish technical formations. And lastly, US economy remains on the recovery track and data are positive.
What could have pull the US market down is oil, specifically the Light Sweet Crude Oil. Europe crisis has somewhat stabilised. Last year, when oil prices rose due to Middle East crisis, US Treasury Secretary Timothy Geithner actually said at US$120, oil will pose significant risk to the US recovery. Light Sweet Crude Oil futures did not reach that level last year. However, there is no "price" given by the US government this year but this does not mean the US government will allow oil price to keep rising. Unlike previously, US government is not confident at what price the oil will trade. When oil price reaches a level that US economy is being affected, the US government will take further actions.
These few weeks, my family had been going through a roller coaster ride as my Dad fought with cancer and bacteria infection. Hedid not pull through. I wasn't quite motivated to write or post anything on my blog and I spent some time with my family. And after we had settled his funeral, I decided that it is time to I should make peace with myself and write my blog again.
The market is an interesting place. When DJIA approached 13,000 pts, a psychological resistance level, the news agencies were reporting that DJIA is unlikely to break this level. While the market was looking at 13,000 pts, I was actually looking at 13,050 pts. Although 13,050 is not far from 13,000 traders/investors who bought on 28th Feb, when DJIA closed at 13,005, a breakout from 13,000 would be disappointed to know that DJIA actually hit highest at 13,056 the next day and it went down subsequently. So why 13,050 and not 13,000? The reason is if we trace back to the market crashed in 2008, it tried to recover in Apr and form a "double top" formation, closing highest at 13,058 before it crashed further.
Having said the above, am I bearish in the market? No, at least not yet. As stated in my previous post, some funds have missed out the ride and waiting to buy if the market retreats. This explains why on 6th Mar when DJIA dropped 200 points, it climbed back. Another reason is 50MA is still uptrend. Some stocks are still trying to catch up with DJIA and showing bullish technical formations. And lastly, US economy remains on the recovery track and data are positive.
What could have pull the US market down is oil, specifically the Light Sweet Crude Oil. Europe crisis has somewhat stabilised. Last year, when oil prices rose due to Middle East crisis, US Treasury Secretary Timothy Geithner actually said at US$120, oil will pose significant risk to the US recovery. Light Sweet Crude Oil futures did not reach that level last year. However, there is no "price" given by the US government this year but this does not mean the US government will allow oil price to keep rising. Unlike previously, US government is not confident at what price the oil will trade. When oil price reaches a level that US economy is being affected, the US government will take further actions.
Wednesday, February 22, 2012
Case Study: Packaging And Marketing Education
About a month back, I was attending a colleague's housewarming near National University of Singapore and I offered my cousin who was studying there a ride home as he was revising his studies in campus. I drove into NUS main campus and could not find his hostel. I gave him a call and realised that I was at the wrong place. He was at the new campus on the other side of AYE known as "University Town". Since it was a weekend that day, he showed me around this new campus...
Some years back, the Singapore government began to market Singapore as an educational hub. At that time, there were only 2 "trusted" universities in Singapore, namely National University of Singapore and Nanyang Technological University. Then Singapore began the development of Singapore Management University. Currently Singapore government is building the 4th unversity "Singapore University of Technology and Design".
Singapore government also loosen some policies to allow more private education insitutions to come in. These insitutions are basically education centres offering degree courses profitably. As such, there are some black sheeps which were basically degree mills. This dented Singapore's reputation and soon the governement began to grant accreditations to carefully reviewed education centres.
Past few years, Singapore has seen increasing demand for its education opportunities. To encourage more students to study in Singapore, the government offers scholarships to oversea students on the condition that they remain in Singapore to work after their graduation. Well-to-do families in Asia countries also send their children to Singapore. When they arrive, they need accomodations, meals, entertainment etc. It is not really hard to deduce that education can be a very profitable business.
Back to "University Town", with my cousin as a guide, I explored this new campus. University Town has all the basic amenties such as eateries, hostels, study, games, seminar and tutorial rooms. Basically, it is self sufficient. It has the facilities for research, teaching, sports and other activities. I understand that there are even masters programme being conducted in the very campus. Students staying in this campus have to take the modules being offered there. In summary, students pay for the education, accommodations as well as other expenses in the campus. This can be seen as a full package for anyone qualified to study in the University Town.
Some years back, the Singapore government began to market Singapore as an educational hub. At that time, there were only 2 "trusted" universities in Singapore, namely National University of Singapore and Nanyang Technological University. Then Singapore began the development of Singapore Management University. Currently Singapore government is building the 4th unversity "Singapore University of Technology and Design".
Singapore government also loosen some policies to allow more private education insitutions to come in. These insitutions are basically education centres offering degree courses profitably. As such, there are some black sheeps which were basically degree mills. This dented Singapore's reputation and soon the governement began to grant accreditations to carefully reviewed education centres.
Past few years, Singapore has seen increasing demand for its education opportunities. To encourage more students to study in Singapore, the government offers scholarships to oversea students on the condition that they remain in Singapore to work after their graduation. Well-to-do families in Asia countries also send their children to Singapore. When they arrive, they need accomodations, meals, entertainment etc. It is not really hard to deduce that education can be a very profitable business.
Back to "University Town", with my cousin as a guide, I explored this new campus. University Town has all the basic amenties such as eateries, hostels, study, games, seminar and tutorial rooms. Basically, it is self sufficient. It has the facilities for research, teaching, sports and other activities. I understand that there are even masters programme being conducted in the very campus. Students staying in this campus have to take the modules being offered there. In summary, students pay for the education, accommodations as well as other expenses in the campus. This can be seen as a full package for anyone qualified to study in the University Town.
Sunday, February 19, 2012
Weekly Comment on the US and SG market (19/02/2012)
US Unemployment Rate and the Presidential Election
Last week, the market was still in a jitter as news reported Greece's bailout remained a doubt. DJIA has run up quite a bit since the last Oct. However, not everybody managed to get on the ride. I believe some, if not many, funds were somewhat caught off guard. Thus last week seems ripe that the market should retreat. Coincidentally, news agencies reported news of EU finance ministers may not approve Greece's bailout and postponed the meeting to Monday; and at the same time, there was a report that the analysts are waiting for a market pullback. Of course, the market then took these cues quite badly and indeed went down. However, it closed a new high on Friday.
I think Greece's bailout fund will most likely be approved, despite the news suggesting that the Greeks are not happy with the austerity measures, suggesting that EU leaders are giving a second thought. I think at this moment, the chances are very low that Greece will be allowed to default. But I think that the EU leaders are considering that Greece should be given one last chance to prove that it can improve their economy. Otherwise, the EU leaders will most likely to ask Greece to leave the EU zone voluntarily.
The US market is seen last week as diverging from the developments in Europe. Part of the reason why US managed to close a new high on Friday is because US economy has been picking up. The Fed Reserve had a conference but there was no mention of QE3. However, I think the Fed Reserve remains very concerned with the unemployment rate, as their incumbant President is running for the his second term. I took a look at the historical data and found the lowest unemployment rate US ever had was 4% in year 2000. Latest released data shows the unemployment level at 8.3%, more than twice than its low. It is no wonder that Fed Reserve Chairman Ben Bernanke had repeatedly expressed his frustration at the slow recovery. Perhaps that is also the reason why every time there is a Fed Reserve meeting, there will be news talking about a possible QE3.
Whether there is a QE3, I think as an investor, I would not guess or anticipate. Currently what is more important is US economy recovery which is supporting the market. So QE3 is an additional bonus.
Last week, the market was still in a jitter as news reported Greece's bailout remained a doubt. DJIA has run up quite a bit since the last Oct. However, not everybody managed to get on the ride. I believe some, if not many, funds were somewhat caught off guard. Thus last week seems ripe that the market should retreat. Coincidentally, news agencies reported news of EU finance ministers may not approve Greece's bailout and postponed the meeting to Monday; and at the same time, there was a report that the analysts are waiting for a market pullback. Of course, the market then took these cues quite badly and indeed went down. However, it closed a new high on Friday.
I think Greece's bailout fund will most likely be approved, despite the news suggesting that the Greeks are not happy with the austerity measures, suggesting that EU leaders are giving a second thought. I think at this moment, the chances are very low that Greece will be allowed to default. But I think that the EU leaders are considering that Greece should be given one last chance to prove that it can improve their economy. Otherwise, the EU leaders will most likely to ask Greece to leave the EU zone voluntarily.
The US market is seen last week as diverging from the developments in Europe. Part of the reason why US managed to close a new high on Friday is because US economy has been picking up. The Fed Reserve had a conference but there was no mention of QE3. However, I think the Fed Reserve remains very concerned with the unemployment rate, as their incumbant President is running for the his second term. I took a look at the historical data and found the lowest unemployment rate US ever had was 4% in year 2000. Latest released data shows the unemployment level at 8.3%, more than twice than its low. It is no wonder that Fed Reserve Chairman Ben Bernanke had repeatedly expressed his frustration at the slow recovery. Perhaps that is also the reason why every time there is a Fed Reserve meeting, there will be news talking about a possible QE3.
Whether there is a QE3, I think as an investor, I would not guess or anticipate. Currently what is more important is US economy recovery which is supporting the market. So QE3 is an additional bonus.
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