Tuesday, August 03, 2010

Stock Market Update

My last stock market update is found here (23 Jul 2010).

I wrote :

"Despite doom-sayers talking about a double dip recession and worsening European crisis, the market rallied for more than a month......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. "

When I wrote my previous update in late Jul 2010, there was a selloff that day because Bernanke said the US economic outlook is unusually uncertain. Today the DOW surged 203 pts because Bernanke said that US consumer spending will accelerate[Link]. The stock market ignored weak economic data in manufacturing[Link].

Since I haven't embarassed myself so far. Lets continue to look ahead. The market is indeed running up to a peak from end Jul to Aug 2010 and I expect pretty good gains in the near term. The market appears to be getting somewhat 'euphoric' and will quickly draw in much of the available liquidity. I ran the new data through my models and it shows we are going to peak between 20 Aug to 28 Aug (with a maximum likelihood of a peak on 25 Aug 2010). Since I've not given myself much wiggle room to fudge the forecast later on, I should ask for mercy if I do get it wrong afterall I'm not a professional and don't get paid for this (actually I do but only from my own investment returns)....you're entitled to bash me later if I get it wrong but do wait until late Aug to see if I've embarassed myself.

Like I said in my previous update. The economic outlook don't look too good. The leading indicators so far shows a slowdown in all major economies - US, Europe and China. I've said despite this impending slowdown, markets will rally due to liquidity and it is doing so right now....but when the liquidity runs out, the party is over....don't be left holding the bag.

16 comments:

Anonymous said...

Hi Lucky,

Don't be apologetic even if u get it wrong.

I, for one, faithfully read your market updates.

I am not an active investor but just like to know about financial affairs around me to safeguard what little reserves I have.

I thank you for your efforts to educate people like me.

Keep up the good work.

Anonymous said...

Thanks Lucky.I would rather take your words for certain things than trust those "agents" with hidden agenda and conflicts of interests.

Anonymous said...

Hi Lucky,

These central banks from the world are going to flood the market with tons of money and drown all the short sellers. Don't believe, that is what they are extremely good in. They have scored IQ tests of more than 200 consistently in flooding market with tons and tons of money.

Anonymous said...

Hi anon 3/8 10:59.
Correct me if I am wrong. At some point, central banks will have to mopped up the liquidity and reduce money supply to avoid a hyper-inflation situationn - a death kneel to any economy (ask Mugabe).
When that happens, a liquidity- driven market is likely to tanked.

Anonymous said...

downturns usually catch ppl unaware especially when its preceded by market driven euphoria. i have a strong feeling you'll be right, cos the doomsayers are already whispering...

Clear eyed said...

Dear Lucky, thanks for sharing with us. Your market updates are a great help to financial illiterates like me.

Perspective said...

Thanks a lot for this, especially the eerie chart from the WSJ. I have been selling a lot of my shares. My more astute bankers also agree with you. The clueless ones are still caught up in the euphoria.

Yang Oi Mun said...

Calling it Double dip is misleading. There was never a recovery. The world economy (esp US,EU) was always in deflation. It was hiding and stalling of debt, so that to create an artificial stock rally benefiting the richest crook.

US real unemployment at 20%. Europe looks gloom. Chinese municipal and local government heavily in debt. Real estate bubble in China urban areas. Come Oct US mid term election, wall street terrorists are going to crash the marketand put a gun to Congress heads. Just like Sep 2008.

So when main stream media(or propaganda) talk about economy/property being back on track to high growth, it means the richest want to dump their holdings.

Jim Rogers, Soros,Jon Paulson, China, India and Russia buying big volumes of gold. Looks like time to look for a safe haven.

Yee Seng said...

Hi Lucky,

I'm curious when you said model. Is that some computerized model that you've engineered yourself?

The Pariah said...

Interesting that the TV broadcast of NDP 2010 featured songs that exhort us to be "grateful for all the good things" - like they have been working for free or for peanuts, ugh?

Then they featured a spectrum of people with eyes closed - like they are telling us to be "blind to all the bad things".

Pathetic, ugh, Singaporeans?

Well, it's ultimately up to us - you and I and all of us born as Singaporeans.

The Pariah, www.singaporeenbloc.blogspot.com

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

Hi Lucky tan,

I follow your stock market updates closely because from your writings, I like the way your analytical mind works.

On hindsight, it seems you were off by about half a month. My own portfolio suffered tremendous damage after National Day. The rally in the Singapore market looked quite dead by 12 Aug 2010. Most global indices look quite dead by now except near home -> the Southeast Asian indices in Malaysia and Indonesia.

Will continue to keep a lookout for your market updates. Thank you very much for sharing.

Anonymous said...

Hi Lucky Tan,

You are completely wrong in your forecasting. Can you explain what is wrong in your model?

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 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.

Anonymous said...

Hi,

Just wondering what you think of the stock market outlook in 2011...