Wednesday, March 05, 2008
That has been my buying entry target levels for a few weeks now, and its coming very soon. Naturally now that I post it, many will want me to justify my call. Well, its my opinion and market reading. I mentioned 1250 in Seng's chatbox a couple of weeks ago, and nobody said anything bearish. Now we can hear 1100 or even 1000 being predicted. It has a lot to do with reading investors' behaviour and sentiment. You don't want to sell at 1400, not at 1350 but at 1250 you really want to sell. That's good enough for me. You cannot really justify buying levels, everyone has one. If you map earnings growth two years out vis-a-vis interest rates less dividend yields, the market is already attractive at 1320, but I still did not see enough bearish calls. Now I am beginning to, and it looks ripe. The additional sums being forecast needed to be written off by banks and mortgage lenders (approximately another US$100bn) has worked its way into share prices somewhat. I see 11,750 as very decent entry levels for Dow stocks.
The current wave down is only slightly related to elections, I mean there are no elections in other markets but they are falling also. There may be some foreign selling ahead of the uncertainty of elections this weekend, but its more overall bad sentiment for stocks in general. I see opposition gaining good ground this time, 22 to maybe 35 or 40 seats. Is that bad or good, who cares. Markets will rebound whatever the result as long as BN is in power. Hope that the stronger preference for opposition will lead to more self-introspection by BN. One can only hope.