Thursday, July 12, 2012

What kind of market participants will be slaughtered?

If you have been following me closely, I have been in very high cash position since October 2011. The market did bounce back nicely and nagging me that I should have hang in there for a while to lock in for more gains. I did not feel sorry because I have been collecting risk free interest for 8 months.

Having sold off almost everything let me have a sense of less detachment. I can distant myself from the markets to see things more clearly. If you look at data closer, most markets failed to make any new high since end of Q1. Indexes shooting its peak correspond with the dates are as follows

Dow 13,242, March 27 '12

S & P 500 1,413, April 4 '12

Nasdaq 3,061, May 3 '12

Hang Seng Index 21,760, Feb 20 '12

Nikkei 225, 10,153, March 28

I hope you can see the markets already peaked out some time in late March or early April and failed to make a new high. There has been gentle rolling downwards that make you feel so comfortable to be in the markets.

In my humble opinion, anyone who cannot wait will be slaughtered.

Those relying on economic data will also be slaughter because they think things are not so bad. Things held up pretty well. Sentiments have been bearish. Many stocks have been fallen substantially. Nobody give a damn to the European headlines any more. China started its easing cycles, bla...bla...bla.  Many of those data is backward looking and not forward looking.

Forward looking data says US is already in the middle of a recession. See this video.

Those thinks Malaysia market is hell of resilient will also be slaughtered. If you studied 2007 roll over, Dow already rolled over in October 2007  but there was hardly any violent signs and it did not bottom out until one year plus later. Same goes to Hong Kong Hang Send index, the market peaked out in late 2007 while our KLSE was making new highs and extended well into January 2008.

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