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.    

Second half Shanghai market

As usual, before I look at Shanghai market, I will analyst the China A50 Future.  Now, let's look at what happened to A50.  Yesterday, the whole day range for A50 was 1270 points.  Volatile is word that I will described about the A50 or Shanghai market.

As I said the first half bull charge has completed.  Second half market tends to be volatile and this is where your skill comes in.  For SSE to go through a longer bull run like Nikkei, it needs a proper correction.  If it don't, look at what can happen - below chart (the 2 arrows that I drew).  Look at how steep the angle was.  Remember this - how it went up, how it will comes down.

A lot of experts said that SSE can go higher.  Of course, you can take the ride but make sure you don't get trap.  History showed that numerous retail investors got trap in the second half market.  Trade what you see.  When market tells you to sell, you better sell.  No "GREED".   And also make sure you don't buy at high. 

STI fall below psychology level

STI fall below 200MA and its 2014 YEC.  The fund managers and psychology level.  Past one year whenever it fall below 200MA, buyers came in.  Are we going to see that again? Trade what I see.  I will be watching to see any signal at level.  I will be watching this Friday US non-farm payroll and Greece deadline coincides.  China market has not go into a correction yet.  Same goes to the US market.  It was still struggling between its range.