Skip to main content

Dow Jones / S&P500
Near Term Importance

Most Asian bourses are a bit wary now that almost all global markets are near or surpassing their all time highs. A lot will look towards the American markets for better guidance and confidence. Dow Jones will easily surpass the 13,000 barrier. The scenario is a bit different for S&P. Though everyone knows Dow Jones index because its been around forever, its not a true indicator of the underlying strength, depth and direction of US markets. The DJ only has 30 stocks, compared to the 500 for S&P. The trouble for S&P index is that some 30% of the 500 are in technology. Most are still some 50%-60% from their bubblish peaks during the internet-zany days. Hence for the S&P 500 to scale past its all time high would take a lot.

That's the not so good news. The better news is that all things being equal, how the tech stocks perform over the near future would determine to a large extent the vibrancy of the S&P 500. As most are still a long way from their highs, we have to examine the likely trends to get a better picture from the tech stocks. Nasdaq would provide a decent guide. Recent spate of earnings from leaders such as Google, SAP, Xerox would point things are headed north. So-so stuff from Intel and IBM are the flip side of the coin. However some concerns are there over reduced corporate spending which would hurt the tech side. So, watch for this week's release of earnings from Texas Instruments, Apple and Microsoft for further guidance.

To get a better grasp of how much more the S&P can go: from the first day of this century till now, the DJ is up some 30% (inclusive of dividends) while the S&P 500 is up around 1%. On fundamentals, the S&P 500 stocks are yielding about 6.4% while the 10-year Treasuries are clocking in at 4.6%. The gap is still there which provides good support for buyers of stocks. As cash holdings are still at an all time high for corporate America, its only prudent that they step up their share buyback programs till the spread narrows significantly. Same way, I would start getting bearish if the gap is less than one percentage point.

Besides earnings, we can expect a slew of M&A and private equity buyouts as PE firms jostled to get ahead of the pack to invest while interest rates are still favourable. These buyouts will inevitably push up prices of same industry class stocks.


Popular posts from this blog

My Master, A National Treasure

REPOST:  Its been more than two years since I posted on my sifu. This is probably the most significant posting I had done thus far that does not involve business or politics. My circle of close friends and business colleagues have benefited significantly from his treatment.

My Master, Dr. Law Chin Han (from my iPhone)

Where shall I start? OK, just based on real life experiences of those who are close to me. The entire Tong family (Bukit Kiara Properties) absolutely swear that he is the master of masters when it comes to acupuncture (and dentistry as well). To me, you can probably find many great dentists, but to find a real Master in acupuncture, thats a whole different ballgame.

I am not big aficionado of Chinese medicine or acupuncture initially. I guess you have to go through the whole shebang to appreciate the real life changing effects from a master.

My business partner and very close friend went to him after 15 years of persistent gout problem, he will get his heavy attacks at least…

PUC - An Assessment

PUC has tried to reinvent itself following the untimely passing of its founder last year. His younger brother, who was highly successful in his own right, was running Pictureworks in a number of countries in Asia.

The Shares Price Rise & Possible Catalysts

Share price has broken its all time high comfortably. The rise has been steady and not at all volatile, accompanied by steady volume, which would indicate longer term investors and some funds already accumulating nd not selling back to the market.

Potential Catalyst #1

The just launched Presto app. Tried it and went to the briefing. Its a game changer for PUC for sure. They have already indicated that the e-wallet will be launched only in 1Q2018. Now what is Presto, why Presto. Its very much like Lazada or eBay or Alibaba. Lazada is a platform for retailers to sell, full stop. eBay is more for the personal one man operations. Alibaba is more for wholesalers and distributors.

Presto links retailers/f&b/services originators with en…

How Long Will The Bull Lasts For Malaysia

Are we in a bull run? Of course we are. Not to labour the point but I highlighted the start of the bull run back in January this year... and got a lot of naysayers but never mind:

p/s: needless to say, this is Jing Tian ... beautiful face and a certain kind of freshness in her looks and acting career thus far

I would like to extend my prediction that the bull run for Bursa stocks should continue to run well till the end of the year. What we are seeing for the past 3 weeks was a general lull where volume suddenly shrunk but the general trend is still intact. My reasons for saying so:

a) the overall equity markets globally will be supported by a benign recovery complemented by a timid approach to raising rates by most central banks

b) thanks to a drastic bear run for most commodities, and to a lesser extent some oil & gas players, the undertone for "cost of materials" have been weak and has pr…