Friday, July 23, 2010

Stock Market Update

In my previous stock market update in June 2010[Link], I wrote:

I ran everything through with the latest data and this is what I got:

1. The market will recover from the recent abrupt drop from now until end Jul 2010.

2. In end Jul 2010 to Aug 2010, the market will form a 2nd peak that will be close but lower than the 1st peak. You should really get out if here if you miss the 1st chance to end out in end April early May.

Since I haven't completely embarassed myself by making wrong forecasts, lets continue. Despite doom-sayers talking about a double dip recession and worsening European crisis, the market rallied for more than a month. If you look across markets, there are a few important things to note. First is relative strength of the some Asian stock markets vs the US stock market. The Indonesian stock market is at an all time historic high[Link]. This is a departure from the rally from early last year when the STI was closely correlated with the movements of the DOW. Secondly the US$ has weakened considerably against the Euro and a number of Asian currencies and this favors the risk trade. On Wednesday the DOW had a sharp selloff because the Bernanke said the US economic outlook that is subject to “unusual uncertainty'. Actually this is not true. Many investors are confused too by the sometimes good sometimes bad economic data that comes out. The confusion stems from the fact that the economic indicates are split into various timeframes some are leading indicators, others are lagging indicators and a few like transport related indicators that can be measured in realtime are coincident indicators. When you get various economic indicators sorted out based on the timeframe ...what it tells you with a good degree of certainty is the US economy has been growing but it is slowing with a good chance of a historically rare double dip. The only is uncertainty is what Bernanke himself is going to do to delay what some people say is the 'inevitable'.

I ran the new data through my models since the last update and it tells me that we are on track for a run up to a peak from end Jul to Aug 2010. Not only that because money is flowing into Asia ...and focussed on index stocks tracking the recent purchases - the STI is up even when advance-decline line dips down) the peak (measured by the STI)may exceed the high of this year. However, like I said things don't look too rosy beyond that and this run up is likely to soak up much liquidity and the outlook for the economy doesn't look too good.


Anonymous said...

I wonder if Singapore's currency is pegged to gold, silver or any of the other precious metals.

Well, whatever. The world is either going to start pegging their currency to precious metals or some other currency. Or, start moving towards a global currency. Too much inflation + deflation: did no one ever learn from the Chinese emperors who tried implementing paper money?

There're going to be many hard times ahead, I'm afraid.

Anonymous said...

No matter what happen to stock market, US dollar, US economy etc, there won't be much difference in Singapore. Property and COE prices will continue to rise, floods may happen again, foreign talents will continue to come, ministers will be well paid, the streets will be peaceful and PAP will win the next election again.

The future cannot be any worse than what had happened so far, right?

That's the beauty of Singapore.

Anonymous said...

No matter what is going to happen, there are two things that remain forever 100% uniquely about Singapore; these are things that will guarantee never change:
large number of cheap foreigners coming to replace Singapore citizens in job market and
steep rise of price of flats.

Musicwhiz said...

An interesting read, Lucky. But I still prefer your commentaries on property and cars. Keep it up!

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This comment has been removed by the author.
Anonymous said...

Dear Mr Lucky

What if STI breaks 3037 next week?
Thats only ,what, 64 points away?
Or dive below 2800?
(Your March forecast was off remember?)
Are you feeling lucky?
Have u actually looked at the trading volume and who are doing the trades?

Hey, u know Mr Obama signed some Financial Reform Bill that was supposed to punish the evil vampire squid? Whose revenue crashed? and whose stock price went up?

STI is up even when advance-decline line dips down) the peak (measured by the STI)may exceed the high of this year.

Does not agree with prediction 2?

jamesneo said...

Hi Lucky, did the market rallied with little volume like what has been happening in US or it is a real rally?

I am only a amateur but the Economic Cycle Research Institute (ECRI) Leading Index is suggesting a higher probability of US reentering recession soon.

Hi can i ask a stupid question :singapore have been actively developing our bond market over the past 10 yrs. Is our cpf being increasingly used to buy this increasing debt which has balloned our public debt to 113% of gdp. Will the collapse of the housing market affect the assets of the cpf which will mean lesser credit to buy our SGS and other bills and bonds? Is this why the government have been actively trying to prop up our hdb prices by letting in numerous foreigners to drive the resale market and thus the new hdb flats up. Is such a move sustainable for 10-20 more years? What if we enter a new recession and we get used to running a budget on deficit by stimulus?

Anonymous said...

Dear Mr Neo

singapore have been actively developing our bond market over the past 10 yrs. Is our cpf being increasingly used to buy this increasing debt which has balloned our public debt to 113% of gdp.

Why u ask qns that are wayyy over Mr Lucky?

Pls stick to market "Up" or "Down".
Thats what he /most care(s)

Our debt are for Great Leader and His DDIL to pretend they are Paulson/Buffett. Oh we are in line to lose more Billions but Mr Lucky is more interested in floods cos that affects his shopping at Orchard and maybe his new Lambo/Spyder.

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Johnlaw2012 said...

I am Just wondering who is going to buy those export of goods. The Eu and USA with such high unemployment?

Nothing has been solve since 2008.
It is just delaying and dragging.

I like your blog but agree it is hard to time the market.

We know what will happen but only the timing is not right.

Anonymous said...

Hi Lucky Tan,
Look like you are completely wrong. The market has rallied over the last few weeks and rally strongly today. You have to modify your forecasting model.

Lucky Tan said...

Please read my forecast again.

I said the market will rally to a peak in end Jul to Aug 2010. We are now in Aug and I believe the market is racing all the way to this final peak. I actually run through the data every few days and my model put the peak at 20-28 Aug. That is when I'll be exiting the market.

Anonymous said...

Hi Lucky Tan,

You are completely wrong in your forecasting. Can you explain why you are wrong?

Anonymous said...

Hey Lucky,

Since you are wrong in your stock forecasting analysis, will you admit that you have embarassed yourself?
Please do not escape from admiting of embarassment.

Anonymous said...

Lucky Tan,

Please show your ball.

As you had mentioned that if you were wrong in market analysis, you would show your embarassment.

Now that you are wrong in market analysis, you have to live up to your words. Do not remain like a coward and stand out to declare your embarassment.

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