Thursday, September 22, 2011

Market commentary

Watch Dow 10,719 diligently.

The market tested these lows and survived. We are just couple points away to re-test this low again. As I entered this entry at 10.53 pm in Penang, Dow stood at 10,796. Breaching this low, program selling is going to send this index and other stocks lower. I saw a couple of analysis that pundits/investors were capitulated twice over the last 2 months. The sentiment is pretty depressed now. But then, I will not argue with the market. Only time can heal. Give the market a bit more time.

Market volatility is affecting business and consumer confidence. Talked to a few friends in the industry. Yes, there is no doubt that we have slow down but the slow down was not like 2009. It was seems like a normal pause to us to allow the overshoot to correct itself. But the feeling I'm getting is like people are expecting great depression.

Also saw this chart.

A lot of people said after Q2 ended, there is no liquidity support to fuel more speculation in financial assets. Not true. If we look at the chart, M1 YoY% growth is getting stronger.

Many also draw the parallel comparison between Greece and Lehman Brother. When the Fed allowed Lehman to belly up, it dragged the whole world with it -- to hell. Will the Euro members want that? Probably not. There is obviously some political maneuvers here and there but those leaders in charge know the consequence.

KLCI fundamentals have not changed much but sentiment is. Most of the stock leaders are throwing in towels. We have not got any meaningful correction for at least 3 years. Even the index retraced back to 1,350, it's only 15% pull back which I think it's a healthy correction.

Congratulation to those managed to jump out around 1,500-1,600 ++ but just remember not to get overly bearish like expecting KLCI to go down to 1,000 points or below. When the tide turns, it could happen very quickly in the next leg up.

No comments: