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Market commentary

I’ve been far too busy in my final year of university to update this blog for the last few months, and it’s likely to stay that way in the near future.

My holdings have changed since I last posted. I’ve now got 30% of my money in a term deposit, while the rest invested in agricultural and energy stocks which have performed very well recently (IPL, QGC and OSH). I also own AQP (platinum stock), and that has held up ok as well (until recently). These stocks all have trailing stops on them. As for the stocks purchased late January? With the exception of AAX, LEI and JET (which were all sold for a profit), all the other stocks I bought earlier in the year were dumped for modest losses…

After almost 6 months have passed since the start of 2008, I thought it would be interesting to look back to what I was thinking at the start of the year.

The outperformers in the first quarter or first half will probably end up being oil, precious metals and agricultural stuff. They’ll probably underperform in the later periods of the year as the laggards (financials et al) start to pick up pace. Thus I’ll be looking to bottom pick some financial stocks showing slight relative strength as that time approaches. The only name I can come up with right now is Babcock and Brown. I would not be buying any financials stocks at this point in time though.

Well, energy, agricultural (and to a lesser extent, precious metals) clearly have outperformed…and financials continue to choke on their own vomit. The question is whether the financials will find its feet somewhat as we prepare to enter into the 2nd half of the year. Right now, I’m starting to think that it will actually get worse before it will get better and I’m gonna steer clear of bottom picking in this sector.

For what it’s worth, I will trash my comment about buying Babcock and Brown in the latter half of the year. The stock right now is a downside leader and should be avoided at all costs if you don’t like gambling. This garbage stock may very well print an intermediate term low today given that it has halved in price over the span of a few weeks, however, this thing is an avoid at all costs. BNB could become another CNP, AFG or MFS for all I know.

Check out the links on my blog roll, as a lot of the ideas I come up with come from them. Notable blogs include http://www.bhcinvestment.com/ (formerly trade bursa malaysia –> some amazing calls from its author) and will rahal.

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Crash Crash Crash

Is a sharp BEAR market rally around the corner? Surely it must be…it certainly smells like capitulation.

I thought the global markets were about to decouple from the US ;p .

Fun times.

Update: Long STW. Long BHP. All @ open prices. Buying some crash :).

Update: Online broker server crashes. Fuck. Hope my stops are not hit.

Update: I’m an idiot.  I really need to start listening to the Fly.  All stopped out, including my remaining IPL stocks (@102~) .  My gains for the year are melting away.

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The SP 500

Thought I’d post some charts.

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And don’t forget to check out Will Rahal’s ‘economic series’. It’s always interesting to see a pro’s macroeconomic analysis. Check out his latest post here.

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Based on monthly pivots, the SPX is targetting a retest of 1550, while the Australian All Ords is also heading for a retest of the highs at around 6850. As always, click on the charts to enlarge it.

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Another interesting chart I’ll post is in regards to the advance/decline line against the All Ordinaries. As you can see in the chart below, the market internals have declined significantly despite the market appearing to hold up well. This doesn’t necessarily mean the market will collapse soon, but it does warn us that the market environment ahead will be different to the one we’ve had for the past few years. (To access a/d data, go to http://sttc.net.au/~stever/).

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Market Status

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If the month end market manipulators get their way, the SPX will probably close at 1455, 1473 or 1490 so as to make the monthly candles line up.

Manipulation is evident in the All Ordinaries as the manipulators are pushing the market up to close just within October’s candle.

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Weekend Update

Update 19/11: Yen is strengthening again. Seems too many people were leaning towards the bull camp too quickly (myself included). I wouldn’t be surprised to see some sort of test of the recent lows before the rally. SPX 1450 and 1438 are currently the numbers to watch. The EUR/USD is forming a triangle as well. Yen pairs are forming some sort of triangle partern too.

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So far 1450 (monthly S2) is holding up fairly well: (Click on chart). If 1450 is indeed an intermediate bottom, the upside target would be 1500~.

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There are several signs that point to a decent rally coming up. One hint comes from the currency market, as the AUD/JPY closed above its downtrend line on Friday:

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Other yen pairs like EUR/JPY, GBP/JPY etc are also in similar positions.

I’ll be looking to looking to go long EUR/JPY or AUD/JPY this week depending on how it behaves on Monday.

I’m also toying with the idea of shorting EUR/USD. As long as it holds below 1.4675 on a daily closing basis, I think the USD will bounce back strongly while EUR will pullback below 1.4530 by the end of the month.
Anyway, here are some charts of EUR/USD:

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So far, the SPX close below 1450 is looking like a fake out, which makes S2 at 1450 (the area I’ve harped on about so many times) valid support despite its breach yesterday.

Either we’ve bottomed, or the market sets up a good shorting opportunity as long as SPX stays below 1484. I ain’t shorting. I did go long AUD/JPY at 98.05 and I’ll ride the rally as far as it goes (target 100.1).

The only thing worrying me is that this bounce was the one that everyone expected.

That being said, we might get one more retrace on the SPX in a week or two, but I’m not holding my breath.

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I hate to harp on about old charts, but my Nov guess was spot on notwithstanding yesterday’s downside fakeout. How the market bounces here determines where it will go from here.

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🙂

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Of all the places, they decide to close the market here:

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Itching to go short here, but I just can’t.

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