(This is not Turtle Trader or Trend Following blog. All stock and strategy mentioned in this blog do not represent buy or sell. This is my digital diary to express my thoughts and opinions about the world of investing. Ultimately, you will be responsible for your own decision. Please consult your investment adviser before taking any investment position).
Monday, June 9, 2008
Impact of Oil on KLSE performance
After went through pages of brokerage reports on recent petrol price hike impacts on stocks, I made one simple conclusion - watch oil. Those bet on stocks now are almost like "shorting oil", shorting at the wrong time could be expensive because stocks prices may go down further. If I want to short oil, wait till it goes below 200 days moving average to be certain the bull run is dead.
After running year-to-date price trend on a few stock leaders in different sectors - consumer: BAT, bank: Public Bank, airline: MAS, plantation: IOI Corp, gaming: Genting, property: SP Setia and Oil and Gas: KNM. I concluded that those buying defensive stocks probably ended up with even, others will be losing money even they are in favorable sector like plantation and O & G. Those were brave enough to buy during major correction(March) and sell on rebound(early May) made 20 - 30% profit. Those reentered market again recently probably sitting on losses.
Last Friday was a bloody day on Wall Street with 3% loss but on relatively thin volume. They reacted to 5.5% unemployment data reignited the fear of recession and oil surged about 8% to US $ 140 in one day. $ 150 is just $ 10 away.
Volatility is back - actually started from mid May - signify correction is coming. However, it will be a better idea to put together a buy list that badly hit by crude oil and wait for the oil bull run running down the hill; avoid stocks that get tail wind from crude oil.
can you show us your buy list
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