Wednesday, October 07, 2009

Stock Market : Picking a top....

UPDATE 9 Oct 2009: The method I'm using incorporates data from the market as it comes in. There might be a need to adjust the peak to the later half of Oct 2009. I'll keep you guys update if the calculation changes. I'll still call the peak before it happens.

Yes I know many consider it is an extremely futile activity trying to predict a top for the stock market. I've been wrong before - many times. But I keep having this delusion that I can "do it". Picking a top is the alchemy of finance - a preoccupation that financial pundits just get can't walk away from. I found something that would have worked for the past but don't know if it is completely useless for the future. But I did put in some amount of rigor and understand that the past may not be correlated to the future. If I'm wrong, don't look for me - nothing surprising since the stock market is considered by many to be a random walk. But if I manage to get it righ this time, give me one round of applause and remind to explain how it is done.

Here is the prediction:

The market will top out some time next week 12-15 Oct 2009 and go into correction that will last until early next year Feb-March 2010.

19 comments:

Anonymous said...

Ok, noted. btw, can u offer any explanation why singtel dropped so much after the announcement of epl monopoly?

Anonymous said...

Depends on 3rd quarter earnings in the USA and other major countries too eh? Australia just raised rates so their central bank most probably saw some good data. So why do you think the market will fall/correct next week ... 3rd quarter earnings disappoint?

Roy said...

To Anonymous 14.24

In my opinion, Singtel's price dropped is due to 2 reasons:

1) Marcro Market Movement -
The global stock market went red for 3-4 days a day after the announcement. A rising tide raise all ships the reverse is true as well.

2) The deal -

The last time Starhub won the rights, they are rumored to have paid $200 million and despite them raising the subscription, it was widely believed that EPL and football channel on its own did not provide positive cash flow to Starhub. Singtel was rumored to have paid $400million, announced that they will try to maintain a pricing that is similar to what Starhub charges, and there a so many homes in Singapore that does not support the Mio box.

In short, Singtel's EPL is very unlikely to be a revenue generator unless it goes back on its promise on the subscription fee. But the question is: Singtel about to go back on their promise and charge an arm without MDA stepping in when Singaporeans are EPL mad when we are so near the elections?

The EPL deal imo is a good addition for Singtel (disregarding the issue of price) to establish itself as a holistic home communications supplier and enhance its Mio offerings as a package. But in the short term (within the lifespan of this deal) the EPL for Singtel is net -ive money deal.

The telecomms industry locally is saturated and profit margins are low. Investors hold Singtel usually for its dividends rather than growth potential of the company. When Singtel, which had already spent so much on the F1 sponsorship, spent more on money losing deals, I expect dividend growth to stagnates

Lucky Tan, I am a newb in the finance world I would like to hear from you on this, and critic what I had wrote (if I had got anything wrong), because I am keen to learn and explore other opinions.

Anonymous said...

Roy, thanks!

Anonymous said...

Read this:

http://www.marketoracle.co.uk/Article13915.html

LuckySingaporean said...

anon 18:46,

My call is not based on the work of anyone of those guys in the article what is the use of being right +/- 6months if your time horizon is not that long. Also, some of them have been saying "crash" all the way from the March '09 bottom.

I'll get to mechanics of the call once we get past 15 Oct...it either happens or it does not. I think it will be obvious.

Parka said...

Anyone can pick a top if they study the people running the company and their strategy.

Just looking at numbers, charts and tables is less than half the picture.

Anonymous said...

erm... I think most smart investors would disagree with Parka at 20:44. It is almost impossible to pick a top or bottom.

Anonymous said...

A typical stock index curve upon recovery from a crash? 60% from the top, 70% recovery, then another 30% drop, then some oscillation but with an upward trend?

Anonymous said...

I was looking at mid oct too.

However, the fact is that stockmarket is about flows and the reality is that the really big players can move the currently thin market if they wish. Eg, our frens pushed down the market because of "bad employment figures" and lifted it with an sector upgrade.

I wonder it is better to just buy blue chips (or ETFs) and review it in 10-20 years (retirement time)

All the best Mr Lucky

Anonymous said...

Hi Lucky,

mind to share why it will be at mid of Oct ?

LuckySingaporean said...

anon 10:07,

I haven't been proven right yet so lets wait for the results first.

Anonymous said...

week 12-15/10, all 4 major banks in US, Q3 result....unless you expect 1 of them go down the drain like lehman bros....
Or US hike rate 0.5-1% to support fall of US$....
Or collapse of commercial property in US or CIT or...
let see...

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Anonymous said...

lucky, see news below. would mid-oct be top or base for next move up?

http://news.yahoo.com/s/nm/20091014/bs_nm/us_china_economy

Yu-Wen said...
This comment has been removed by the author.
Pirauss465 said...

Lucky Tan, seems like you are wrong this time. The market actually rallied this week... :)

LuckySingaporean said...

Pirauss465,

The market actually went higher it is within my window for the peak 12-15 Oct 2009.

However, a heavy slew of good news may have taken the peak to next week, I'm still watching.

Anonymous said...

lucky, so are you taking the stand that market will sell once the good news end?

what if the good news forms a base which takes the market even higher?

i think this is good discussion we having here.