Thursday, January 10, 2013

Chinese New Year Rally

The retailer investors had not jumped into the stock market in a big way - yet. . The situation can change in the next few weeks as the three major fears begin to recede. You can feel the heat of them warming up

The first fear was the US fiscal cliff which I though it was over-hyped. The second fear was the Euroddegon but now the region is showing some signs of stabilization  The mother of Euroddegon fear Greek was turning around. The rate of Euro zone PMI has shown gradual recovery though it is still in the contraction zone of 47.2 in December. The third fear was China hard landing. It is appear that factory orders too are showing improvement and more data is supporting a soft landing.

The risk appetite is  getting stronger. People is moving money out from safe haven. The US 10 year treasury yield is inching up everyday. Whether it will march towards 52-week high of 2.38% is something to watch closely.

Some of the very unloved markets like Vietnam has breakout from its consolidation range and very possible to test 52-week high of last year March of May.

Back to our local stock market. The small cap index that has been moving sideways for the last 7 - 8 months seems ripe for at least trying a 10% rally. You can feel the heat as the overbought situation was quickly neutralized.

At this point of time, the retail investors are still very nervous. A few points dropped in the KLCI will trigger them to take profit or sell down their holdings thinking the market will collapse. It is unlikely that the market will collapse when they are thinking collapsing all the time.  If you are looking at the same small cap chart, there could be a window of sharp gain like early of last year. That window may be open for 3 - 4 weeks.

My view of this post is strictly based on sentiment analysis and for trading purpose. Meaning, I accept cut loss if I am wrong. I have been debating with myself whether I should write this piece because I worry people can lose their hard earned bonuses. But I concluded that I am not that persuasive......

Back to the bonus thing, most people think it is money drop from haven, thus easy comes easy goes. Not trying to sound preachy but just may been half-sen worth of view. Spend it the old fashion way. If you have debt, pare it down. If you have been eyeing on something nice the whole year, don't hold it back -- do yourself a favor -- reward yourself. If you still have some money left after doing these, punting on stock market conservatively is okay. The word CONSERVATIVE is the key.


KAI said...

Thanks for the info and caution word. All the best to you :)

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