Nightmare week for the ASIA market

This week for ASIA market, it was really a nightmare.  It rolled down fast and far.  Interest rate has already given them so much pressure, and with the additional of RMB devalued, the fear and selling pressure went high.  Regardless, retail or fund, everyone threw their towel.

Let me pull out a few charts to show you the fear that caused the fast and far downside to these indices.

STI:-

Another one : Taiwan Future

Look at the those colourful wave, how wide it was.  It showed you the fear from those investors.  How fast it came down.  Worst, morning opened with a gap down and afternoon closed lower. 

So far, STI has came down 17%, Taiwan 22%, Hang Seng also 22%......  Last week, Nikkei was still on the upside, but this week it dropped 8.8% .  What about China?  Once again, experts said that China lead the whole ASIA markets, scrolled down from the hill.  9-July, SSE has dropped 35% (3373) from its high (5178).  Then it rebounded to 4200.  Following weeks it travelled between the range of 3500 to 4000.  Today it closed at 3509. 

China devalued it RMB worried especially countries in the AISA.  To China, devalued RMB was to raised up their export competitively.  But to other countries, it was a different story.  So to stay competitive, we saw other ASIA countries devalued their currencies as well.  Plus the worry of US raising their interest rate, the impact on the ASIA markets was like two macho pounding on a person left and right shoulder at the same time. 

Now let us look at the Europe market.  Let's look at the Europe big brother DAX.  So far, they had came down 17%.  What about our big brother, US?  Let's look at DOW.  DOW has been travelling sideway for the past six months.  Last week, it broke the sideway range.  Till yesterday it has came down 7.4%.

End of next week till the week after next, there are couples of important reports and event going on.  China PMI, US PMI, Non-Farm.........and Jackson Hole.  Watch closely and trade on what you see and not what you think.  Remember today market is mend for trade.

Base on TA:-
From the chart, I see fear.  Base on the downside, currently mama bear is pounding on the bull.  But far it can go?  Most of the ASIA market has dropped more than 20%.  Base on FIBO pull plus supported level, the mama may get tire at around 30% downside.  The bull may take this opportunity to fight back.  Can the bull win the battle?  It will depend on whether the papa bear is still sleeping or awake.

Base on fundamental / economic:-
It is common for politician to step in as to save its market, currency........  However, he/she should knows when to step in and when to take a step back.  As too much involvement will cause the market to go haywire, confusion and disorder.  This is what happen to the current market.  First time in history the bull charge for more than five years.  He may still have the last breath to fight, however he is really tire right now.

What to watch out:-
As mentioned above - China PMI, US PMI, Non-Farm.......and Jackson Hole.  On top of that, I realized that most of the people is really for the increase on US interest rate.  The question now is 0.25%, 0.5%, 1% or...........  As I had said Fed chairman Janet Yellen knows the consequence, she should be smart enough to go around with the number. 

Continue to monitor how the market goes and react to those monthly reports and news.  Example if good news and market continue to fall, this is something that you should be watch out for.  Once again, today market is mend for trend. 

Singapore property market really bottom up?

On 1-September 2013, I mentioned to watch out for the Singapore property market.  The price will come down.  Both on the resale and new private property.  On top of that the rental as well.  http://achua138.blogspot.sg/2013/09/property.html

We saw that in early 2014.  Till date, say the resale HDB flat, in general it has came down around 15% to 18%. 

Past three months, we saw lot of so called property experts came out to say that it is time to buy houses now as it has bottom up.  People spent money to attend seminar which conducted by those experts as to listen ad seek to their view.

I won't listen to all these so called experts.  As I understand who and where they came from.  My view on Singapore property market is in fact it has not even reach the bottom yet.  There are still rooms for the price to go down.  Why I said that?  Simple.  Interest rate has not gone up yet.  Global stock market has not really tumble. 

I saw developers eagerly lunching and trying to sell their unit.  Hong Kong property guru Li Ka-Shing was selling his property shares.  So what was the indicator?  Watch out not only on the Singapore property market but also Hong Kong, Beijing........

Why ASIA market tumbled?

When Shanghai index crossed 4300, I declared that the SSE wave 1 bull charge has completed.  And it is time for correction.  However, the bull continued to charge all the way to 5000 point.  During that period, I kept warning everyone "do not chase after it", "look at how steep the inclined angle is", "how it went up how it will come down" and "when market tells you to sell, you better sell".  http://achua138.blogspot.sg/2015/06/second-half-shanghai-market.html

Finally, SSE tumbled on mid June.  I studied China economic and politic, TA and fundamental, and politic and I posted this on 3-July - SSE probably need a 30% correction.  http://achua138.blogspot.sg/2015/07/china-market-and-greece.html  15-June to 9-July, SSE came down from 5176 to 3373, a 35% correction. 

All these, you can called it how predictable...., how I foresee all......or magical numbers, infact they are nothing special.  I studied past history, how market moved on mature and non-mature markets.  Human greed and fear, how fund manager invests, how professional invest/trade, how retail investors/traders invest/trade....... Then I linked that to the current market situation, and from there I got the answered.  I always remind myself, never listen to others, no matter who he/she is.  Do my own research and analysis.      

As I said second half market is going to be volatile, how much and how far China market can goes, depend on this correction.    http://achua138.blogspot.sg/2015/07/knowing-who-and-respect-he-big-brother.html

Last 2 weeks, 95% of the ASIA market indices tumbled.  A lot of the so called economic experts claimed that it was because of the China market.  Was that true?  To me, no.  If it was true, China market started to plunge on 15-June, why didn't they follow. 

As I posted on 12-July http://achua138.blogspot.sg/2015/07/knowing-who-and-respect-he-big-brother.html  Knowing who is big brother and pay respect to him.  Yes, US market.  And yes, interest rate.  Then you may ask interest rate has not increase and US market did not tumble?  This is different between the mature and non-mature market.  Remember someday in end of August 2013, how numbers of ASIA markets and their currencies tumbled that related to the QE unwinding?  http://achua138.blogspot.sg/2013/08/recap-on-what-happen-in-asia.html

Too much of "The boy who cried for the wolf" is no good for USD.  Fed will definitely raise the interest rate.  Is all now about timing and how Fed managed so that it has minimum impact to the market.  Therefore, I will be watching very closely on how and what Fed does before the actual raising of interest rate take place.  And also how market react and respond before the physical announcement / actual rate rise take place too.   

Knowing who and respect he big brother

SSE came down strongly 35% and bound back up to 23% from the it top.  That was what I also means by how it went up, how it come down.  A steep up side and a steep down side that took place on China market.  Political involvement, non-mature investors.........all lead to the fast track roller coaster ride on the China market. 

Almost half of the stocks are freeze from trading.  Those who hold more than 5% of the company shares are not allow to sell their stock over the next 6 months.  The new rules took effect.  It stopped the indices from falling?  So is China market really to go for another bull charge?

I prefer China market to have some consolidation over here instead of another steep up side.  Why?   http://achua138.blogspot.sg/2015/06/second-half-shanghai-market.html  At the same time, look up when and how the freeze counters are release.....and the 5% share holders are able to..........

Greece referendum, 61% of the voters voted "No".  They rejected the creditor proposal debt settlement plan.  But now, Greece PM Alexis Tsipias seems to accept the creditors pension plan........and now they asked for €53.5bn from the creditors.  Things are not going to be easy.  EU is not about German.  It have France, Finland............ The referendum, then the result of "No" and now accepted most of the creditors proposal plan with additional counter proposal plan and asking for a higher third bailout........it is not so simple about promised, it is about "trust".  What will happen if....and what will happen if.......  Most of the people is looking at the positive side.  But as a trader, I should be on guard.  Everything goes smooth, market will go up.  But if things go wrong especially Greece is force to exit euro zone, market will react. 

Knowing who and respect the big brother.  Yes, the US.  Federal Reserve chairwoman Janet Yellen has repeated her view on Friday that the central bank is likely to start raising interest rates this year.  I will be monitoring this carefully.  How and what Fed does before the announcement of rate increase take place.  And how the market respond before physical announcement / actual rate rise.  Take note on this - this year the Asia and Europe markets have gone into a correction but the US yet. 

China market and Greece

Despite political involvement, central banking cutting the lending interest rate and lowering reserve ratio, China market just continue to plunge.  If I look at the SSE and A50 charting, it shows "fear". 

China is a non-mature market.  They are more retail investors/traders than the institution investors/traders.  That is the problem.  The greed of this retail investors/traders pushed the market up by 160% in 14 months time.  These two numbers were absolutely not acceptable.  Look at the China economic numbers, example of their GDP.  They just couldn't fix in on one and the other. 

Balancing all these plus what the charting is telling, SSE and A50 probably need a 30% correction.  Trade what I see.  Look for signal when it come close to this level.

Greece is a sideline player inside the Euro zone.  However, this player can become the key player inside the main show. 

The people of Greece vote and select their own government.  They expect this government to do something for them.  Greece borrowed money from IMF........  To receive the fund, Greece government needs to compromise some of their country policies.  If we look deeper, in fact certain percentage of this fund is just like left pocket in, right pocket out to origin.  Nevertheless, if Greece does not receive this fund from the creditor, what happen is bank, pensions fund........as what we are seeing right now. 

Greece PM Alexis Tsipias declared a referendum on 5-Jul to decide whether to accept or reject the creditor proposal debt settlement plan.  Tons of EU members and others described PM Alex Tsipias move as "gamble".

Let us look at Iceland.  Years back Iceland encountered similar problem.  The Iceland government wrote off their external debts through a call for referendum.  This external debts then featured as public debt instruments and sold it to British and Dutch banks and the respective public who were tempted by the high interest rate. 

Is Greece trying to apply what Iceland did?  Greece's main creditor is German bank.  The bigger concern over here is - if Greece will to leave the Euro zone upon debt default, others may follow as and when they are unable to repay their debt.  By then, people may lost confident on EU and the EURO may become historical.

Let's see how things go over this Sunday.  On guard and monitor the situation. 

China market - as long as nothing goes wrong, this is a positive correction

As what I keep saying - Shanghai market, first half bull charge had completed.  What next is it is going to be volatile, and it needs a proper correction.  We saw that over the past few days.  And today it has the heaviest fall of -7.4%   Till date, SSE has corrected -20%.

What about China A50 Future?  So far, it has dropped 21.2%.  So what's next?  Minimum correction of 20% is what I am looking at.  As long as nothing goes wrong, this is a positive correction.  Prepare for the second half bull charge.  How long this second half will last?  Depend on steep the slope is.  Whether is a gentle 30 degree slope of 75 degree slope.  The steeper is it the faster it end.  Refer to the below 2 chart.

Having said that, watch out what is happening on Greece as well.   

Interest rate

Remember the statement I used to describe US Fed chairman Janet Yellen against interest rate?  If no, here it is "US Fed chairman Janet Yellen knows the consequence of raising interest rate." 

She knows that.  Yellen saw how market reacted when Fed stopped QE1 and QE2.  But this time when QE3 ended, things were fine.  Why?  Because someone took over the baton.  Japan, Europe....... started printing money when US QE3 ended.  So why is there a hurry for the US to raise their interest rate since everyone is printing money.  Having said that, rate increase is a matter of time.  The challenge is how to minimize the impact.

Early May, Janet Yellen warned that the US stock valuation were too high.  Few weeks later, she insisted the economic remains on track and the rate rise this year is on the cards.  What was she trying to do?  Yes, the "impact". 

Today we have IMF, warning the U.S. Federal Reserve should delay the rate hike until the first half of 2016 until there are signs of a pickup in wages and inflation. 

Fund manager, analysis......and so called experts had been predicting the raise of interest will kick off in somewhere second half 2014 to this year Q1, Q2 and now they said should be in Q3, Q4.......... Is predicting so important? 

Today market is mend for trade.  If you still thinking of invest buy and hold for 3 to 5 years.........well think twice.  I won't do that.  I know the day of rate rise will come.  But the actual timing I won't know, nobody knows.  So I trade what I see. 

The day will comes and I know the consequence.  I am watching what Fed has done before the announcement of rate increase take place.  And how the market respond before physical announcement / actual rate rise.  Just like gold and USD.  They were like 2 persons sitting at each end of the see-saw.  Gold weaken, USD strengthen.  Gold strength, USD weaken.  Knows the rules and join the game.  Enjoy the shows, enjoy ride and very important knowing when to get out.