Saturday, August 02, 2014

Global Equities Bull Run Intact

When the minor selloff came on Thursday, some including me, we a bit comforted, as we needed a breather of sorts. It also helps to gauge the breadth and sustainability of the current uptrend. Global equities were not shaken even with the plethora of negative news over the past few weeks. Be it the Gaza problem, the downing of aircrafts, Argentinian bonds default ... 

The first positive development was that stocks were able to successfully hold key support levels for another day. Stocks as measured by the S&P 500 Index  made an early run at its 100-day moving average, which has served as reliable support on four occasions since the beginning of 2013, but at its lows of 1916, the index never came closer than five points to this support level, currently at 1911. And the S&P 500 still remains a solid distance away from its 150-day moving average, which provided key support during the correction at the beginning of 2014, currently at 1883. In short, the recent correction over the last two days at least to this point continues to represent nothing more than a pullback in a longer-term uptrend.

When looking at immediate trends, one cannot really be looking at fundamentals alone. The price volume data reveals the underlying thinking of Mr. Market. In both the charts above, Russell 2000 and Nasdaq, the more reflective and broad based indicators, showed that both markets were actually quite finished with the selling and is close to oversold levels. I am not the only person watching these charts. They almost always, always bounce off the 30% level, which is where they are at now.

Looking at local equities, the sharp reversal on Friday morning brings forth a lot of positives. The bounce back by many "hot stocks" indicate that the underlying sentiment and strength are very strong locally. What was more surprising was that more than 15 stocks broke their 52 week high during the last 3 trading days. I am confident that the bull has not been hurt at all.


Kevin Wong said...

Since 2009, every mart correction, has been a buying opportunity. Market not only rebounded back to its previous high, but also set new highs & continously set record highs over the last few years. This uptrend, of course cannot go on forever. But those who have followed this current trend, have been well... And, those who have dared to go against it, well the least said the better!

Those who have had tried timing market by selling during every mart pullbacks & buying back later, wouldn't possibly have got their timing right all this past 5 years. Often they sold too soon, and bought back too late. Sometimes, the counter they sold not only didn't drop, but also had gone up instead. Some too may have totally miss the rebound, as they weren't convince of the sustainability...
I, too can't outsmart mart, can you?

I believe those who have stayed fully invested throughout, are the real gainers here. Plus, they don't have to endure as much angst, stress...

Now i began to appreciate the wisdom of long term investors like Warren Buffett & Tan Teng Boo!

bruno said...

From 65 pts in the red to 8 pts in the black in Friday's European trading,I lock in 5 pts and waited to be stop out.Of course I knew that the stops will be hit,but the thrill of being in the black and still in the market after sweating for months is worth the 3 pts.Honestly I would be a happy camper with a 20 pts loss.

The Israeli-Palestinian conflict is no big deal.It happens every 5 years or so.Hopefully,this time the Palestinians will learn their lesson,and leave the Israelis alone and never bother them again forever.Just like the Sunni's and Shite's this is a never ending affair.

The Argentine mess will be a forgotten affair soon,and the hedge funds will get pennies for their dollars as offered.The Argentines have told them to go f*ck themselves,umpteen times already.

Soon Putin will feel the heat and his knees will feel the wobbling of a creep that he is.To save face he will come out with the usual big talk and later offer to put pressure on the separatists to a ceasefire and have tea with the Ukranian leaders for a chit chat.

After the Ukranian tea party,the warring factions will have a party for the bulls.A relief rally will pull the markets to a new high.I figure the S&P will top in the 2025-2050 range.I will go short again at 2010 and higher.As I have said before,I am not that brave to be a bull and would prefer to play the market at the short side.Let the bulls do the final dance by pushing the heavily loaded train up hill.

If the markets were to make another all time highs,it will not last long.The next target after will be 1860-1760 in the S&P's.If it breaks 1760 all hell will break loose and will revisit the subprime levels or lower.Dow 5,000-3,000?

Now that I am free and have gotten rid of the monkey on my shoulders,let us go back to the markets that we excelled in,the Fx market.Early next week,let us go counter trend and buy the Kiwi which has given up 350 pips the last couple of weeks.After 100-150 pips profit we will go flat and re-evaluate the trade,wait for a correction and see if the up trend in the Kiwi will continue.

If the up trend in the Kiwi continues expect an all time highs of 92 cts.If a top is in by year's end it will be at around 75 cts.

Happy trading and cheers.

bruno said...

The Russell 2000 is breaking down first.Like all markets it is the blue chips which rallied first,followed by the second and third liners and then the 1-2 penny stocks.When going down the hill it is always the penny stocks and third liners leading the pack.

It is a percusor of worst things to come.This is the first sign of the orange lights flashing.Soon the bulls will be loaded up onto the trailers bound for the slaughterhouse.You guys better believe it that the Dow will eventually be en-route to 5k or below.Ignore my well intended advice at your own peril,especially the professor with his buy and hold forever strategy.

bruno said...

Why I say the markets will tank sooner than later.

1)The feds have painted them selves into a corner,with no alternative plans out.

2)The over confident and complacent bulls.The experts on business channels and media cannot have enough of this bull,that they have to gobbled up this bull plus more.

3)That the feds will be there whenever the markets are in trouble and need them,only thing is that QE will end soon and the feds have run out of bullets with their always prolong period of never ending lower rates.What will happen when the markets forced their hands?

4)The subprime mess in the US is not over yet.The markets and economy are doing fine so the mess is being push aside for the time being,as the media and business channels with their expert guests are more concerned and interested in the bull markets in stock then talk about housing mess.Even the federally funded scheme set up to bail house owners underwater out will eventually fail.Who is going to pay for the rescued homeowners lowered mortgages if they do not have a job,good paying jobs or sufficient incomes to pay mortgages after putting aside for three decent meals a day plus neccesities.

5)The housing bubbles in China which eventually will burst and will be felt the continents over.

6)Like I said before the Pigg's nations will come back and revisit their benefactors,the EU sooner rather than later.

Kevin Wong said...

Many have earned the title, "the man/woman who manage to forecast 12 of the last 2 market crash". Some have even managed to predict 20 mart crashes that have yet to happen! But who knows maybe this 21st time... If not than the 22nd, or 23rd...
Better still, just repeat the same mantra every 2 months.Of course they will get it right one day, eventually - and then they would declare, ""See, I told you so, I'm so clever!"".

Lol, just joking only-ah!

bruno said...

Kevin Wong,

Trading is a game where traders try to outwit the other guy taking an opposite position.It is good to be able to predict market clashes.The only thing is that I have been searching for that one particular crystal ball that can do so.Since the day I started trading about thirty five years ago,and I am still searching for that particular crystal ball till today.

Trading is trying to anticipate what the market is likely to do next.And to take that trade and sit and wait for the market to tell us if we are right or wrong.That is why we have protective stops.If we are stopped out,it means that our timing is not right.Or rather we are wrong.

I have said many times before, being right or wrong of the trend is of no importance to me.Being a technical trader I trade counter trends most of the time.Sometimes when volatility is high I flipped positions several times a day.

And I have said before that,I have been profitable so many times when being wrong.If one were to trade counter trend and made money,you would have to be wrong to made money.Or else I would not still be in this game.

Before I used to post my trades as soon as I made them and also when I exit them.You can refer back to the old posts for the time the trades were taken.But I do not do that now,or else I might have to charge you too(just joking only,lah).In fact I cannot remember any losing month until this f*ckup S&P trade,which I finally made some bits after sweating it out for months.But I would have taken my losses in stride if I was stop out and never lose a second's sleep.I have been in this game long enough to know that losing is just part of the game.

By the way I have gone long the Kiwi at 0.8510 basis cash.(all my charts are on cash basis so as not to have gaps like in futures charts.Happy trading guys.

Kevin Wong said...

Dear bruno,
I'm refering to those who are bearish on stock markets, especially those doomsayers of NYSE & Bursa. If i were a a trader of the S&P, i would have most likely have a long over short ratio of 5 to 2 since 2009.Not only because i'm bullish during this period, but isn't it the only way to make money as a trader during uptrends? Even bearish traders would have gone long, maybe every long for every 2 shorts in this current very bullish uptrend.
How many times have you long the S&P since 2010? How come yor're so negative on stock markets, you have something personal against stock markets? You don't have to answer me of course, as i'm just a small & humble investor.

Wishing you the best & successful trading,

Naruno Tony said...

yes, gonna be a wild August (up)... maybe spillover to early Sept, worry comes later into oct... my master says 2020 to 2070, then Oct low to 1850... then up again to 2020 or byond end of year and that's it... CNN says
extreme fear now... so buy the opposite of mainstream media...

bruno said...

Kevin Wong,

I have been short the S&P many times from 2010 forward.Do I lose money on the way up?No.Do I make a lot of money shorting the markets?No,just peanuts.Most of my profits came from the Fx markets.

What I want to point out is that markets cannot go up forever.And this bull market is being fueled by the world's central bankers.Earnings are good as the lower greenback help U.S. multi nationals doing business overseas.And their earnings looks very good because they are hoarding their cash instead of re-investing or upgrading their plants in the US.

And not to forget many were on the brink of going belly up if not for Uncle Sam and Big Benny coming to the rescue.I have already stated my views why I said that the markets will have a party for the bulls before all hell breaks loose.We do not have to wait long.The most is weeks or a few months down the road.Will this bull last till next year?My 2 cts worth is a big 'NO'.What I am saying is to get prepared for the next phrase,that is the big bear.I may be wrong but definitely a 10 -20% correction is the minimum to expect,if not a full blown bear market.

bruno said...

Although the Dow was up seventy five pts today,and the greenback was soft the stock market and the currencies have got no legs.This will mean more weakness ahead,at least for the next few days.Or is it the start of bigger things to come.

Kiwi stops move to breakeven.In the money for 15 ticks,but I have reservations about this trade.

bruno said...

We got chased out of the Kiwi at break even.

bruno said...

I have gone long the Kiwi again at .8470,40 pics below where I got stopped out.As a trader my objective is to take advantage of volatility.Stops at .8440,twenty pips below last week's low.

bruno said...

This afternoon the Kiwi sunk to .8451 about 10 pips below last Friday's low.That means last Friday's after NFP rally is wave (iv) and the plunge today is wave (v) but 10 pips is too shallow to call wave (v).In Wednesday Asian trading expect a low of around .8420 area.

So instead of taking off at break even,Kiwi is now at .8471,stop loss will be lowered to .8388 so as not to miss a three or five wave rally after wave (v) is over,if it is not done already.

bruno said...

Wednesday morning in Asian trading the Kiwi drop to .8423 and made an intraday high of .8488 in NA trading.Stops moved up to .8422.If over .85 stops move to breakeven.

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