Tough paper I took, which really drain more than half my life. Especially history of management thoughts, woo! Anyway, I have seen the US markets recently and it seems that it has taken another beating down and as of now, it is below the 13000 mark. What does this signify? It was at this point too in Sept before the fed rate cut to save the markets. From then, the surge of a 1000 points and taken out again within a few days! Asian markets also took quite a fair bit of dropping, with STI maintaining about 3500 as of 10am. Unlike the previous time, the news this time was more on inflation, depreciation of the USD, and rising oil prices. While I spoke of this earlier, inflation is gonna spook the markets. With the depreciation of the USD, oil prices are bound to rise as oil is traded in USD. When USD drops, it means you use more USD to buy oil. Simple economics here. The mention of the subprime again, but this time round, it seems like its impact is getting lesser and lesser as the oil prices was the main killer here.
In Singapore market, many stocks have suffered the same fate too. My monitored counters like YZJ and celestial, dropped back quite a fair bit. When this happens, it indicates a good chance for me to re-enter celestial again. I was reading the charts for celestial and it is almost time to re-enter a position for it. It has breached past its 20,50 and 200MA already and at the 38.2% fibonacci area. As far as I see, the 38.2% mark indicates a price at $1.17. If it ever really fall to that, it is really a good buy and hold.
Taking an indication from dow, as I said earlier, this counter typically follows the pattern of dow, and dow has been dropping for the past 4 days. As far as I see, it has never last through more than a week. Also, my feel is that the market is quite spoofed of this huge drop and it's like a repeat of what happened in August to September again! I will post a chart analysis I made for celestial and indicate a good move in when it happens. Now is still not the time yet. Why? Take note of any recovery from a major drop, the first to move is always the blue chips. If the blue chips never move, you expect all the 2nd tier and 3rd tier stocks to move? If the news tell you the stock market is dropping everyday, noone is gonna buy any stocks at all! This is psychology at play, and big buyers always do this.
Second factor is the consolidation period. Every counter has to go through this normally. It doesn't do a super sharp retractment and bounce up straight away when it takes a huge drop. It usually goes through a period of small up and down within a channel and depending on the market sentiment, and do a breakout. As my previous charting shown, celestial went through that within the $1.18 - $1.22 channel for more than a week before the china stock play.
Another news from china is, china government has ordered the banks to increase its reserves to curb the bullish markets in china.
Next is the Yen/USD trade. This is the website for the latest update:
http://www.nni.nikkei.co.jp/CF/FR/MKJ/
As of now, it is at 110.25-110.27 - 0.07, which in my opinion, very dangerous! 116 at its normal, now trading way below its value, is showing very strong weakness in the USD and strengthening of the yen again!
Lastly, patience is very important in this market now! The counters being monitored by me are:
- Celestial
- YZJ
- Asia Env
- Ara (this counter is very dangerous)
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