You should pay attention to what the big boys are doing

What most people think it would not happen, it happened.  The world has changed.  People are sick with those politician game.  People are sick with those politicians who smile at you but then they are not sincere. People are.......... continue to struggle even thought every month the data numbers tell you how good is this how good is that. 

What people are looking for is someone who can represent their voices.  Don't believe, just look at what happened over the past few months.  What happened to Phillipine, Brexit and of course now the US. 

Analysts and experts mentioned that if Clinton will to win the US election, equity market will go up by XX%.  If Trump win, market will tumble by XX%.  Now, as what I mentioned - you don't swing with the news nor numbers.  You trade what you see and not what you think, he think or she think.  First you ask yourself "Who am I?".  Second "Which type of trading strategy suit you?" and that lead to "what kind of trader you are?"  You are a swing trader, wave trader, intraday trader or..........  Don't just listen to those so called gurus tell you. 

During Brexit you saw how the market swing.  The market swing wild, just like a roller coaster.  On that day some market even dropped more than ten percent.  But what happened next?  (http://achua138.blogspot.sg/2016/06/brexit-panic-wiped-2-trillions-off.html)  So you trade what you see.  You should pay attention to what the big boys are trying to do?  Are they really pushing the market to north or to south or are they setting trap for you to jump in?  That is more important than anything else, and not what the so called gurus and experts are telling you.  So good luck to you and me.  Trade with care and trade on what you see.  Anything can happen right now. 

You need to formulate your own opinion and not rely on the so-called experts remark/call.

My broker, the experts, analysts......... have been keep telling me/everyone the bear is coming, the bear is coming..... with Brexit, we are going to see a double impact to the market.  But what we saw over the past few weeks was DOW, NADSAQ and S&P broke history high.  Europe and Asia moved up strongly.  Seem like nothing is able to stop the upside.  So the question is - the markets right now is actually bull or bear?

Those who follow my blog, I am sure you know who were the big boys who pushed this markets to go higher and higher.  Why not you tell me - the equities market right now is bull or bear? 
I don't define the current market movement neither bull nor bear.  I define the big picture as territory.  Current market movement, I define them as trend.  What do I mean by that? 

Let's look at the big picture as well as the small picture.  Let us look at what is going on with the world economic, central banks action, system, education.......history and what you should be looking out for?

It is very sad to say that today economics was taught to student more like philosophy then engineering.  Economics has become mathematical rigor and modelling.  The problem with this mathematical model is - in order to make problems tractable, we need to make assumptions.  And assumptions become axiomatic.  But then the fact is markets are not efficient, nevertheless it has been conveniently been ignored.  Mathematical models also can't include unpredictable impact of speculators either.

Not only on the education, today challenges and issues are solve with that mathematical model.  Print money and to print more money.  There is a big risk on this continuously of QE one after the other.  Market will react negatively  when the amount of QE launched did not meet the investors, analysts.....expectation.  Just like the recent one that happened in Japan.

Can anyone remember what happened to Y1993 when Roosevelt decided to print money and go off with the gold standard.  The moved depreciated the dollar and it neglected the deflation.  It didn't bring a high level of inflation.  Gold and bonds went up at the same time.........

Let's take a look at a much bigger picture.  The 5 phase cycles:-
Stage 1 - Countries are poor and they know that they are poor.
Stage 2 - Countries growth and they started to get rich quickly, but then they still think that they are poor.
Stage 3 - Countries are rich and they know well of themselves - yes, we are rich.
Stage 4 - Countries start to become poor and to poorer, but then they still think that they are rich.
Stage 5 - Countries go through deleveraging and relative decline, which they are slow to accept.

So, which stage, your country is, right now?  Countries in stage 4 are in a danger of what I called a wake up call.  Countries at this stage spending continues strong, they continues to appear rich even though their balance sheets deteriorate.  They spend a lot of money on military.   At time they spend even more because of war as to protect their global interest.  However, their infrastructure, capital goods.......become older and less efficient.  They increasingly rely on their reputations rather than their competitiveness to fund their deficits.  Their debt goes higher and higher.  Bubbles starts to form............... this lead to danger of entering into stage 5.

Now we go into the small picture.  Anyone remember any of the financial crisis whether is sub-prime, Asia crisis..........?  Let's look at the one in Y2008.  When you think the crisis starts?  The day when DOW plunged 500 points?  Fundamentally, housing prices started to decline in Y2006.  Subprime credit indexes started to go down in January 2007.  Money market liquidity dried up in August 2007.  Declining housing prices were impending storm clouds.  But then only in end Y2007, early Y2008, investors started to realize that the crisis has took place.  And between Y2006 to end Y2007, equities markets continued to take new high inside the volatility roller coaster swing.

In a bubble, who is to say how far the market can go?  Who is to say when the bubble will burst?  No one.  During the bubble period, games and numbers are highly manipulated.  You see insanity everywhere.  You don't short just because your so called experts said the wolf is here.  You don't long because your so-called said.......   

Investors and traders get all excited on news, fundamental and price movements.  But they completely misunderstand or do not understand there is a bigger picture behind.  The analogy of sailing.  The wind matter but the tide matter too.  If you do not know what the tide is, and you plan everything just base on the wind, you are going to end up crashing into the rocks.

One of the day, 伟哥 will lose it function.  Patience, wait for and recognise the right time.  You may said - but I am not the expert.  You need not have to the brilliant economist, experts.....  You just have to recognise when something matter, and you react to that.  Retail investors/traders, you really need to formulate your own opinion and not rely on the so-called experts remarks/calls. 

Exposes Central Bank Scam

Brexit Part 3

From the day of Brexit till now, 23 days or more than 3 weeks, we saw an interesting markets behaviour.  On the day of Brexit, we saw global market tumbled by 7%, 9%........... But the week after Brexit, market just turned around and this weeks we saw the US market, DOW and S&P broke history high.  Lots of other major markets, as well, broke their first and second major resistant. 

Those who follow my posts, I believe you know why and what was happening.  The week after Brexit, as I mentioned on my 26-June posted, government funds will come in to support the equities market.  If we look at the volume on that week, it tells us that the showed was purely from central banks. 

The following weeks, on 3-July, I mentioned that prepare for retracement / pull back and it is about time for the professional to perform.  We saw the retracement and we saw what the professionals did.  They surfed with the wave.  Retracement was just for them to enter at a much better pricing.  The day of retracement, we saw articles everywhere saying that here it comes, the impact of Brexit....... So if you sold your stock at that moment, now you know who you sold it to?

Which markets were the biggest winner on the ride of this U-turned?  Taiwan, UK and of course the US.  Before the result of Brexit, 80% of the people were not expecting Brexit to exit.  They were all wrong.  The moment that the result of Bexit was out, the so called experts expected the markets to go wild, calling everyone to sell.  They were wrong too.  Today, what I saw over the past few days, I started to see many so called experts started asking people to buy, do not worry, the bull is ........ Retail traders / investors are really lost.  What the hell is going on?  In a while, market tumbled, the next moment market just turned around and hit months / record high.  This don't happen only on Brexit but it has been happening over the past 2 to 3 years.  What is going on? 

Today market is meant for trade.  We should not dance with all those stupid news and numbers.  Those news and numbers are only for mend for analysts to tell everyone oh today market up because of....., tomorrow market down because of ......

Brexit really bad for the UK?  May not.  Give you an example - FTA.  It will be much easier for the UK to negotiate with countries like the India and Australia on the FTA as compare when they were in the Euro.  The fate of UK, very much depends on the new government.  How they perform.  How they work with each other in the parliament, their people/residents and with other countries.  Nevertheless, if they underperform, big different opinion, political game going around.......... then it will be a nightmare.  So it is too early to say how the UK future going to be.

The worry is in fact on the Euro.  Will other Euro member follow what the UK did - Brexit?  Since there were uncertainly and not knowing of the outcome, then why Brexit bring the market to new height?  As I mentioned earlier, first the support from the central banks.  Next, you ask yourself, if you were a professional surfer, you are in the sea and you see the wave coming, what will you do?  Will you get up and surf with your surfboard?

Let's us go to the US.  Raising of interest rate has been the talking point over the year.  Initially, Fed said that they will raise the interest rate base on unemployment rate........then they said they are worried about the slow economic from China.........and then the Brexit..........  Seem like a no ending story/excuses.  As I said Janet Yellen is not stupid.  She knows the consequence of raising interest rate when everyone is printing money.

US election year - final one in November.  President Obama belongs to Republican or Democratic?  Hillary Clinton belongs to Republican or Democratic?  So what about Janet Yellen?  So while you are guessing about when the US is going to raise their interest rate, take this into consideration.

Dispute on South China Sea.  Former president of Philippines, Benigno Aquino III, a keen supporter for the return of the US back to Asia.  Thinking that Philippines could tap on the US to seize control of the disputed territory and exclusive rights to the highly valuable economic zone, he brought the case to Permanent Court of Arbitration in Hague.  Nevertheless, in the very beginning China has mentioned that neither they agree nor accept the verdict. 

China is very clear, they highlighted so many things like welcome dialogues with its neighbour countries over the disputed of South China Sea.  However, US keeps sending naval ship to that area.  Is it part of the US strategy to ease tension and weave a precarious path between provoking China and ensure Beijing abides by international norms or the US also has interest in the region, not only because of its complex relationship with China, but also because the waters represent a key trade routes ............or.........  ?  You judge yourself. 

Before Rodridgo Duterte could sit down as Philippine’s 16th President on July 1, there was already a war of words going on between the United Nations Secretary-General Ban Ki-moon and Duterte’s camp.  Will Philippine new president Rodrigo Duterte work with the US like what the former president Benigno Aquino III did?  We shall wait and see. 

When we look at the economic of US, ask yourself if it is really that good?  If no then why do US markets keep breaking new high.  You should have known the reason by now.  And look at other regions, how their economic progress over the past few years?  There were lots of uncertainly yet we kept seeing this - whenever you feel/think that the market 完蛋了, the hope and greed return?  One after another, the market survive. 

Yes, the answer is knowing and respecting the big brother.  Today market, no longer so much about fundamental.  You won't know how is UK going to be in 6 months from now, 9 months from now,...........  You won't know who is going to be the next US president?  You won't know............  What we are seeing right now, they are all artificial.  They were all because of all those stimulus, printing tons of money.  Flowing everywhere. 

People are now expecting more stimulus to come.  From the UK, Japan Australia......  It is very sad and shameful to say that nowadays whenever there is an economic uncertainly, central bank will start to print more money.  This QE is like the drug of 伟哥.  You feel great, high, fantastic after taking it.  You love it and you continue taking this drug.  You can't perform without this medicine.  One day, you find that this 伟哥 doesn't seem so powerful anymore.  So instead of taking one tablet, this time you consume 2 tablets and next time you consume.........  Sadly one day, you will reach to a point that this medicine is no longer effective to you anymore. 

My advise to all retail traders and investors out there - know what you are doing.  You trade what you see.  Do not listen to others.  Don't dance with news, articles, analysts advice.........  do not invest/trade blindly.  Do know when you surf and when you should put on your parachute.

Lastly, let's look at 2 charts:- 
Taiwan Future - you see a long red bar on June that penetrated through 307.  That is the day that Brexit took place.  Between 308 to 310, that was where the funds started to come in.  It supported the markets way up to 323 and then you can see a retracement took place.  Above 312.6, that was where the profesional got in and pushed the market to break the first major resistant as well the second resistant.  So for the mean time, whenever there is a retest or pull back, these two 307 and 312.6 have become the big psychology support for the Taiwan Future market. 

You may use this approach to analyse the market that you trading, whether DOW, FTSE, .............

Second chart, we look at DOW.  We look at Y1998 to Y2000.  Before Dotcom bubbled burst in somewhere end of Y2000.  One of half year before the crisis take place, market behaved like a 打不死的小强。That's what I mean by "do know when you surf and when you should put on your parachute".  Having the parachute on, you need to know when you should jump.  90% of the retail investor/traders do not know this. 

Nigel Farage EuroParl on Brexit

Listen to Nigel Farage speech.  Those words were what I mean on my 26 June posted , eighth to tenth paragraph.  ......Will Scotland fight for independent?  Will other EU members follow what UK did?What have been done over the past few years, was to save the market instead of really saving the economic.  Lower income and sandwich class struggle to.............people became frustrated............

Brexit panic wiped $2 trillions off world market

Last Friday, we saw a typical roller coaster ride in the global market.  Asia investors/traders were the first one to take the ride. 

Asia market plunged around 2% after market opened when result showed that Brexit's voters was leading.  Around 10am, market turned around when result showed Bremain voters leaded.  Market shoot up, broke Thursday closing price and some markets even crossed their resistant level. Unfortunately this cheer did not last long.  An hour later, once again Brexit turned around to lead.  This time, market took the second plunge, all the way down to negative 3%, 4%, 5%.......  US future even at one time triggered the 5% cooling alarm.  FTSE future down by 9.5%....... 

The ride did not stop here. At 3pm, Europe stock market opened.  CAC, DAX.......plunged seem unstoppable.  However, hours later, we started to see FTSE recovered from its -9.5% loss to -7.5% to -6.5%......  By then, Asia market went into T+1.  By 9.30pm, US stock markets opened.  Global market started to follow the US, recovered from losses.  Unfortunately, this gained did not last long either.  Hours later, markets started to plunge once again al the way to closing.

This Brexit panic wiped $2 trillions off world market.  Sterling pound slumped to 31 years low.  In Singapore, several people rushed to the money changer, hoping to cash in on the sliding pound.  However, these people were disappointed after being turned away by money changers who either refused to sell or claimed they had no more stock.

More than seventy-five percent of the people did not expect Brexit to happen.  If you are one of them who tap on to a lot of the so called expert called, you should know most of them has little worried about the result of the Brexit to happen.  When labour MP Jo Cox was shot on 16-Jun, market shoot up.  We saw UK market continuously up for seven days ranging between 1% to 3.5%.  I received message, email, called from my those well known remiser (retail investors/traders called them expert) advice me to buy.  And so once again, I learned what I had been always been sharing in my blog - Do not trust anyone, do your own homework.  And trade what you see and not what you think.

The Brexit result is out, so what next? 

How much more the market is going to sell down?  That very much depend on the result aftermath.  PM David Cameron announced resign.  Scotland first minister Nicola Sturgeon pledges to protect Scottish EU interests.  More than two million have signed a petition calling for a second EU votes.........Will Scotland fight for independent?  Will other EU members follow what UK did?  This is something that worry the EU most. 

Over the past few years, we saw country after country printing money, lower their interest rate.........   All those artificial things been done did not really help the economic.  Instead, it went into the market.

People, the lowest income together with the sandwich class struggled to survive.  They don't live much happier than yesterday, the day before, the month before, the year before......... We saw inflation number with only 0.5%, some countries even having 0%, -0.5%, ........  But ask ourselves the daily food, groceries....that we purchase, got more expensive or cheaper?  And by how much?  Oil came down from hundred over dollars to forty over dollars.  You drive your car to the petrol station.  How much you are paying per litres?   

These people became frustrated.  They started to vote for someone who really speak for them.  Beside the Brexit, we look at the recent selected Philippine president Rordrigo Duterte, US Donald Trump........  Of course, how capable those guys are, that is another side of the story.  However, if they are able to prove their capabilities after been elected and got into the parliament, by then we will start to see politician starts to go into the another direction. 

The next few days or even weeks, market can be very volatile.  It may not be that easy and straight forward.  How panicked the market can be, depends on what I mentioned earlier- the aftermath.  Government funds will come in to support the equities market.  Short term and intraday traders will do the ride.  This group of traders can go either way.  One thing for sure, they will surf with wind direction.  So trade with care.

My new website: http://achua138.wix.com/mysite

ECB cut interest rate, expand QE

Once again, the "ba ku teh" story.  Not salty, add salt, not spicy, put more chilli powder and pepper, not enough water, add more water.......this is what exactly happening now, adding ingredient after water, water after ingredient.   

Yesterday, ECB showed hand.  They cut its main interest rate from 0.05% to 0% and cut its bank deposit rate, from minus 0.3% to minus 0.4%.  The bank will also expand its quantitative easing programme from €60bn to €80bn a month.  And the bond-buying programme will continue at least until the end of March 2017.

During Draghi speech, euro dollar fell, stock and future market spike.  An hour later, they went the other way round.  Example of DAX which gained around 3% became negative 3%  We saw analysts came out to say.......oh because of this because of that......... 

Let's take a look at past history.  The last time Japan reduced their rate, market responded negatively.  The last three times that China reduced their interest rate, market responded negatively as well.  It seem like market (investors and traders) is sick of all the interest rate game. 
 
What about QE?  Whether was US, Europe or Japan, as long as QE, their respective market took new height/high.  What about this time round?  Like the past, positive and take new height?  Or market is becoming sick of all this game?

What we saw yesterday, the spike and then turned around, euro dollars fell and then U-turned up, those were just how the big boys moved the market around.  Big boys wanted to buy and they need seller, wasn't it?  When you know another set of money is coming into the market what will you do?  Buy or sell?  If everyone buy, where the seller come from?

Next question, how long the possible rally may last?  Will the respective market take new height?  Not forgetting our big brother, 15 and 16-Mar FOMC.  I don't think Janet Yellen is going to say US is going to raise another 0.5% interest rate on end Mar or so......nevertheless I still want to be on guard, in...case..... And of course, the other one, 20-Mar oil producers in and outside the OPEC exporting countries plan to meet in Moscow to discuss an output freeze. 

Most important, monitor the big boys closely.  The coaster ride will continue.  Anytime, anything can happen.  Know what you are doing. Do not listen to other.  Enter a trade with good reason.  Define your cut loss and of course knowing when to take profit.  A lot of investors know how to buy but do not know how and when to sell.  Profitable trade become.......buy at $10, sell at $3.  So not forgetting this - knowing when to sell is more important than knowing when to buy.   

ECB, FOMC and Oil Producers meeting in Moscow

Markets fill with "GREED".  Everyone is looking forward, the politician will save the markets. 

Couples of important meeting over the next 2 weeks.
1) Tomorrow 10-Mar, ECB meeting.  Expect more stimulus and lower interest rate...
2) 15 & 16-Mar - FOMC. Expecting FED will not raise interest rate.......
3) 20-Mar - Oil producers in and outside the OPEC exporting countries plan to meet in Moscow to discuss an output freeze.

The big boys already stand by.  The outcome from ECB, FOMC and the oil producers meeting n Moscow will affect the markets direction.  Anything can happen, please trade with care.  Know what you are doing.  Define your cut loss.  When market goes against you, make sure you act without hesitate. Never challenge the market.  Trade what you see and not what you think.  And enjoy the show / ride. 

Christmas rally?

Some said it is time to buy....some said long term down trend and short up trend.......some said correction is over don't miss this opportunity........Christmas rally..........Singapore property has already bottom.........

In general, markets came down between 16% to 44%.  Not surprising, mature markets came down lesser than the emerging market.  Difference on the down side in term of percent, happen not only today, ten, twenty years back was this way, 10 years from now will still the same.  http://achua138.blogspot.sg/2015/08/why-asia-market-tumbled.html

As I said - first time in history, bull charge for more than 5 years.  He was tired and the mama bear took the opportunity to pound on him.  Nevertheless, the bull still has the last breath and he will fight back.  And that was what we were seeing over the past few weeks.  How far can he goes? 

I mentioned that - with politician involvement, the market is not easy to foresee and predict.  Past one to two months, I saw lots of retail investors/traders chose to stay out.  We saw market went down and the up like coasters.  Experts said that it was because of the US, FED will not raise their interest rate in October, in Y2015.  Why?  Because of the poor monthly data numbers.....

Those were only an excuses and 骗人的借口.  The person who really moved the current going around were the fund, institution.......Lousy PMI numbers, lousy non-farm numbers........if someone is going to tell me those numbers are great as it means that interest rate is not going to raise.  You know what I am going to ask him/her?  Continue to have those poor numbers for 3 months, then you continue to tell me oh good........  Common sense tells us whether those lousy numbers are from the US, Europe, China.....or anywhere, what does that means?  Something wrong is with their economic, isn't it.  Then what the expert going to say next?  Oh another QE?  You will come to a day where people is going to be sick of that QE.

First time in history, country after country are printing money.  Interest rate close to zero.  The next crisis going to come, won't be that easy as what we think.  Now, those people who save their money inside the bank is stupid, right?  Why?  Because of depreciation, inflation........  Inflation really at 0.1%, 0% -0.1%.......you better know how this number was calculated.  Your daily expense, a plate of chicken or a can of baby milk powder, how much it cost in 5 to 10 years back compare to now?

Concern and worry about China economic growth.  That's only one part of the story.  As I said knowing and respect the big brother.  Janet Yellen knows the consequence of raising interest rate when everyone is printing money.  What she was doing was to buy time and doing something which called psychology approach.

Today market is mend for trade.  You will continue to see the coaster ride.  Whether the bull will bring us to another peak or papa bear will pound on him before he exited the peak, I know only one thing, the market is at current situation - refer to the chart.  The Y2007 scenario. 

As for Singapore property bottoming up, is time to buy?  Refer to my past posted - http://achua138.blogspot.sg/2015/08/singapore-property-market-really-bottom.html.  You are going to see housing rental, office rental, industry rental coming down, private property................http://achua138.blogspot.sg/2014/01/hdb-resales-price-falls-for-first-time.html.

How fast and far interest rate moves is more important than the first raised

Another no outcome FOMC.  Like what I said - Janet Yellen knows the consequence of raising interest rate when everyone is printing money.

Is really no good when we have too much of "The boy who cried for the wolf"  Interest rate definitely needs to raise.  What Janet did now was to buy time.  Timing of raising the interest is one thing.  Most important is how fast and how far the interest rate moves after the first raised.

Traders and investors, we just need to be on guard and trade what you see.


************************  CONTINUE WRITING - PART 2   ***************************

I did some researched on the weekend.  Instead of opening a new file, I decided to continue writing it inside this "How fast and far interest rate moves is more important than the first raised".

As I mentioned, Janet knows the consequence of raising the interest rate.  She not only buy time but she was doing something which I called "psychology game/approach". 

When Yellen announced FED is not going to increase the interest rate, US market gone up higher.  However, an hour later before closing, the indices slide down with an approximate angle of 75 degree.  Next day (last Friday), Europe and the US continued to fall.  Europe 3 major indices came down around 1.4 to 3%.  US declined with an average of 1.45%. 

Past one months, global market falls because of fear.  Fear on US may raise the interest on September.  But last 2 days, market fall was because of uncertainty. 

Investors, traders, fund.........hate uncertainty.  Watch how global market react over the next few days/weeks.  If market continues to fall, this is where the so called psychology approach comes in.  At that time, when US starts to raise their interest rate, even there is an impact on the equities market, it won't be that great.  And don't be surprise, market may welcome the approached as a clear signal that people has been waiting for has finally surface.

Next question is - how fast and how far the interest moves after the first raised.  The is very important as it is going to affect not only the equity market but also the future and property market.......  

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. 

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.    

Simple introduction on 沪港通

沪港通 a door for us to buy China shares.  It is set to lift the trading volume of certain Hong Kong and Shanghai shares.  Shanghai-Hong Kong Stock Connect establishes mutual stock market access between mainland China and Hong Kong.

In total, 568 Shanghai-listed stocks (A-shares) will be available through Hong Kong while 266 Hong Kong-listed stocks (H-shares) will be accessible by mainland investors.  Out of the 266 H-shares, about 70 of these companies are dual-listed in Shanghai and Hong Kong. 

Share prices and trading of A-shares will be in Chinese Yuan while share prices of H-shares will be quoted in Hong Kong Dollars and settled in Chinese Yuan.  The arrangement will boost the use of the RMB in global trade.  Oversea investors and traders may want to take of this - share transactions are executed in Chinese Yuan, this poses a currency risk to overseas investors, who must choose to pay a fee to hedge their translation exposure or be subjected to foreign exchange fluctuations.

Both exchanges will impose a daily quota of RMB 13 billion (A-shares) and RMB 10.5 billion (H-shares) respectively.

Chinese institution and investors with a minimum RMB 0.5 million in their securities accounts will be granted access to Hong Kong shares through mainland brokerages.

The Stock Connect will not allow intraday trading while investors are required predeliver their orders. This means that purchases and disposals of A-shares must occur over separate trading sessions.  Intraday traders need to take note on this.

Market shake because Obama authorises Iraq air strikes on Islamist fighters?

US President Barack Obama says he has authorised air strikes against Islamic militants in northern Iraq but will not send US troops back to the country.

 As I always mentioned today US is under President of Obama.  The way he handle international issue is totally difference from previous US president, Bush.  Listen properly and capture the important words and sentences that he used. 

"The US cannot and should not intervene every time there is a crisis in the world," Mr Obama said.

US could not turn a "blind eye" to the prospect of violence "on a horrific scale", especially when the Iraqi government had requested assistance.

"We can act, carefully and responsibly, to prevent a potential act of genocide," he went on. "Today America is coming to help."

He said that US air strikes would target IS fighters, should the militants' convoys move toward Irbil, where there is a significant presence of US diplomats and military advisers, or threaten Baghdad.

In addition, he authorised strikes "if necessary" to help Iraqi government forces break the siege at Mount Sinjar and rescue the trapped civilians.

He added that the US could and should support moderate forces that could bring stability to Iraq, and he said there was no "American solution" to the turmoil plaguing Iraq.

"The only lasting solution is reconciliation among Iraqi communities and stronger Iraqi security forces," he said.

For a president who is still busy withdrawing his troops from Afghanistan, what do you think, to bring the whole troop to Iraq?  Well.......only when he doesn't have a choice or there is really a need. 

We have Iraq issue over here and we have Israel issue too.  Keep a close look up on their progress.  I am very concern on the sanction war between Russia and the US and EU.  How US and EU response to the recent sanction by Russia, watch out on that too.  The impact to whole world economic can be as great or even greater than the earlier two. 

DAX has already dropped 10% from its peak

US and Europe imposed sanction on Russia.  It was mild at first but have been tightened sharply since Malaysia airliner was brought down.  Now, the US and EU are targeting at Russia's defence, oil and financial sectors.

What does and how does Russia response to this sanction? 

Russia will ban all imports of food from the US and all fruits and vegetables from EU.  Putin ordered his government to come up with a list of agricultural products from countries that had imposed sanctions on Russia, which would be banned in retaliation.  A sweeping response to the US and EU sanctions imposed over its support for rebels in Ukraine. 

War of economic sanctions?  Who is going to be the winner?  Who is going to get hit?........Just quote one - it will hit consumers at home who rely on cheap imports, and on farmers in the West for whom Russia is a big market.  Moscow is by far the biggest buyer of European fruit and vegetables and the second biggest importer of U.S. poultry.

Russia imported $43 billion worth of food last year.  Russia bought 28 percent of EU fruit exports and 21.5 percent of its vegetables in 2011.  It was the second biggest buyer of U.S. poultry after Mexico last year, accounting for 8 percent of U.S. chicken meat exports.  Do you know Russia since the early days after the Soviet Union, when cheap American chicken quarters sold at street markets were called "Bush's legs" after the president.

Stock market moves ahead economic.  Let's look at EU market.  Whether is FTSE, DAX or CAC, dropped, dropped.....DAX took the lead, it has came down 10% from its peak.  Nevertheless, it is at critical support level - between 8900 to 8980.  If this support broke, the next one is at 8460.

2014 Half Year Review

Eight more days towards end of 1H2014.  Those who read my blog probably by now know why I prefer to look at 3300 as the resistant level instead of 3280.  Since May, resistant 3300 had been tested seventh times.  Each time, it broke 3300, selling pressure came in.     My stand did not change – for STI to test last year high, it needs to break 3300 plus stand firmly above 3330.  

Now, let’s look at the big brothers and things happening around the world. 

February, DOW touched Opera house base line and rebounded.  April, NADAQ touched the Opera house base line and rebounded.  Each time when correction reached certain critical level, someone will say/do something to push the market back up.  Same goes to the other way.  Each time when DOW and S&P reached history high, selling pressure came in.  This scenario happened not only once but countless of times.

Under Ben Bernanke, he mentioned that when jobless rate go below 6.5%, they will increase interest rate.  What is the jobless rate now?  Yes, 6.3%!  Did US increase interest rate?  No!  Now, jobless rate is no longer the guideline to determine increasing of interest rate.  New FED chairman Yellen knows the pro and con of raising the interest rate.  Do you?  Look at history.  Have you ever see how interest move?  Do they move like stock market?  The answer is “no”.  Janet Yellen knows very well the cons of raising interest rate.  We look at Europe.  ECB took deposit rates into negative territory.  Why?  Just only to boost their economic, that simple?    

When and in what circumstance will US starts increasing their interest rate?  US dollar depreciate, inflation goes up.  Beside US dollars, inflation and interest rate, fund managers, traders and investors are watching closely on the 10 years US Treasury.  Watch out when it hit 3 to 3.5%.

Shanghai Index tends to have a very good support at 1950 to 2000.  It used to rebound whenever it dropped below 1950/2000.  Recent IPO and China economic data have given some pressure to the China indices.  Nevertheless, I don’t see a problem over these two.  Like what I said, it will benefit China in the long run.

I am now eagerly watching another project that coming out between the China and Hong Kong - 沪港通Shanghai, Hong Kong Stock Connect.  Under this connection, Hong Kong investors are eligible to purchase China stocks.  Same goes to Shanghai investors, they are allow to invest Hong Kong stocks.  This is going to benefit China and Hong Kong stocks in the long run.

Last year we have Syria.  This year we have Russia and Ukraine.  And now we have Iran and Iraq.  How US responded?  Did US send their troops to Syria?  Remember what Obama did?  Russia and Ukraine?  What action has been taken so far?   Iran and Iraq.  US which invaded Iraq in 2003 to topple President Saddam Hussein and withdrew its troop in 2011.  You see the difference in the way of handling international issue by current President Mr Barack Obama?   

Russia - Putin, a guy with colourful profile – 16 years as an officer in KGB, rising to the rank of Lieutenant Colonel, enter politics in 1991……..became President, Prime Minister…….  Look at how he reacted when US and Europe were trying to take action on Russia.  Russia is a country which has huge assets and lots of foreign currencies in their reserves. 

India!  I have been watching India over the past 5 years.  In term of economic, India shouldn’t be lacking so far behind China.  New and the 15^th Prime Minister of India Narendra Modi. The Indians have high hold on this new prime minister.  I am looking forward to see how he tackle corruption, inflation which is currently eight over percent, growth, safety……..external relationship………

Alibaba files for an IPO in the US

Yesterday, Alibaba filed in the U.S. for its initial public offering. Alibaba, an e-commerce company, a mix of Amazon, EBay and PayPal. There’s Tmall, an online shopping mall; Taobao, a marketplace where small Chinese companies can sell directly to consumers; and Alipay, a digital payments company that Chinese consumers use through their mobile phones for all sorts of transactions, on Alibaba sites or off.

So, what is the big deal with Alibaba IPO? This Chinese Technology company Alibaba does huge business. Last year, they sold $248 billion in goods—everything from frozen fish fillets to Nike sneakers to used jetliners.  In one day last year, it saw $5.8 billion in transactions. Alipay was used in payments worth $519 billion. Alibaba is the biggest e-commerce site in the world’s fastest-growing economy, one where many inhabitants aren’t even online yet. Because it functions largely as a marketplace, Alibaba’s operating costs are relatively low, and that, along with its very low taxes, means it enjoys profit margins of 45%.

Analyst estimates for the company’s post-IPO value range from $136 billion to $245 billion. If it’s anywhere but at the bottom of that range, that means the company will be more valuable than Facebook.

Big winners from the sale will include Alibaba founder Jack Ma, who owns 8.9% of the company, Russian entrepreneur and investor Yuri Milner, and the American private equity firm Silver Lake Partners.

Yahoo owns 22.6% of Alibaba, a fact that has been one of the few things bolstering its stock price. It will sell off a little less than half of that stake in the offering, for what is estimated to be at least $10B, and there’s already speculation about what the company will do with it: go on a buying spree of smaller companies? Buy back shares?

One of the questions analysts asked in the days leading up to the IPO filing was how much Alibaba would look to expand beyond China. In its prospectus the company seems to keep its focus at home. The company points out that China has far less retail space per capita than the U.S. and wealthy European countries—0.6 square meters per person, compared with 2.6 square meters per person in the U.S.—while at the same time online shopping still makes up only 7.9% of Chinese consumption. And consumption in China in 2013 made up only 36.5% of GDP, as compared with 66.8% in the U.S. China, it seems, has only begun to shop.

 

Top 15 defence budgets 2013