‘UN-BLOGGING’ SINCE MAY

Like the proverbial Wall Street axiom “sell in May and go away” we have gone on unceremonious break since May. We acknowledged that most of our followers are disappointed at the sudden cut in our blogging activities; this was due to other demanding sides of our business and a consideration to revamp the concept behind this site. We sincerely apologize for the break. Hence, we are using this opportunity to announce that we shall be returning to skeletal blogging until we finalize plans on a new outlook on bringing you the markets’ heartbeats as we see it. We are most grateful for your kind considerations and for bearing with us.

Note: A trader who has followed the axiom ‘sell in May and go away’ this year would have missed out on a significant 1,675 points move (a 14% gain) from the lowest point this year at the beginning of June peaking at the end of September.

PRICING IN THE GREEK GODS’ FURY

Is this market correction or a crash or the beginning of a bear market? The continued deterioration in the market after a blissful start to the year is highlighting a sense of tragicomedy to the play so far. Indeed, among other seemingly lesser effects the Greek gods are behind the scene; they are at loggerheads threatening to destroy the fortunes of their kingdom even when mortal men (EU) are offering a soft-landing. Their wrath is burning a hole into the global market as traders have began pricing in the consequences of the likely inevitable; Greece leaving the EU. The chief at IMF; Christine Lagarde has highlighted that IMF is “technically prepared for anything” eventhough Europe Lords; Hollande and Merkel are enticing the Greek gods to stay in the realm of men. Anyway, it is May coming with its self-fulfilling prophesy of a downturn market and the Greek crisis is the catalyst precipitating the change. Now, playing the markets has become a game of reading the minds of the Greek gods. Will they sheath their swords or release their fury?

OIL DIPPING

Where are the demons driving Oil price sharply higher in December and sustaining it all through the first quarter. So Iran is not going to war with the world anymore, the Greek gods has returned recession to Europe, the angel fanning Chinese economic expansion is on holiday, Asian economic growth fairies are dying, dollar is growing greener, the global love of oil is waxing cold. All these fundamentals that have helped fueled Oil price chosen to align their wrath on the energy market all at once. A consipracy theory you presume. But really the little boom in the energy market has deflated, currently standing in negative terrain on the year. Eventhough, Barclays‘ analysts are emphasizing improving U.S. demand and robust  Asian demand be cautious ask those who believe rising energy prices may hampered the global recovery process when to buy. Retail speculators should be careful of large commitment in the energy market presently as we are in shallow waters and the whales to swim with are in hibernation. However, carefully watch what is happening in Greece as a significant dip in Oil Price will have smart money back in play.

RED ALERT! MARKET GOING JITTERS TOMORROW MORNING


Traders are already on the edge and will be buzzing the sell alarm to hell on Monday morning in reaction to the election of François Hollande as the new French President. Some analysts have already totted that this outcome has already been factored into the market reactions last week. Don’t be seduced stay off-line, hold your cards! Late evening tomorrow might present the opportunities for the killing. Watch the Euro crosses. And gold will be the beautiful bride.

I think I heard you asking why would there be a ‘stampede’ on Monday. The bail-out faith containing investors’ worries of Europe financial crisis is backed by Germany and France. To put it more succintly; it is backed by Angela Merkel and Nicolas Sarkozy. Now that Sarkozy is ousted, investors would like to retreat and see the cards new Hollande will deal. Feelers point to Hollande not being absolutely dispose to all Sarkozy’s considerations and positions on prevailing EU issues. In the coming days if investors’ fears are confirmed, these market jitters may become tides!

AFTER THIS APRIL CONSOLIDATION, WHAT NEXT?

Hi Readers, we are quite sorry for the break on our postings. We want to reteirate our commitment to continue with the blog posts still. Though, we have not made a post in the last one month we have not been out of sync with the market. We have been largely liquid expecting the market not to do much which invariably was so. The global financial markets have been in a swing since March peak. Indeed, it has been a month of consolidation. Support for this consolidation has come from a relative favourable earning report season so far.

However, this range might be broken in the month as there are critical fundamentals threatening to usurp early-year assets’ gains. Emerging U.S. economic data especially job data suggest the previous six-month gain is loosing foot-hold crystalizing investors’ concern about the strength of the recovery process. Developments from French presidential elections and concerns about the aftermath of Greek election are other fundamental spotlights. Improved Chinese manufacturing data and Chinese government reaction to inflationary concerns seem to be stemming the tide from the eastern coast.

If indeed May is the time to sell and go away; as the market-old axiom suggests then it might as well be the time for long-run investors to enter the market otherwise swing traders will continue to hold the sway.

THERE WILL BE VOLATILITY!

Indeed, the markets have been consolidating in the past few weeks and the global equity market broke the darling 20-week average with the Dow peeping below 13,000 level for the first time since mid-March. The fundamentals that have provided supports for the rally are now shaky. First is last week’s pointer from Fed‘s minutes that further stimulus might not be entertained. Then came Friday’s Non-farm Payroll coming in at 120,000 against analyst’s estimate of 200,000; the lowest since January 2009. This emphatically justifies the claim that the addition seen in hiring during the past 3 months is temporal and influenced by the festivity demands.

With more important Data due from China in the week that kick-start U.S. earnings season and investors waiting to react to last Friday’s disappointing jobs report, the short week may set the course for a price correction. Traders should be mindful commodities lost a lot of ground last week and a formdibale support in the short-term seem absent. I think it is a week to stay on the sideline or be well-hedged, surely there is going to be volatility!

THANK YOU!

We like to apology to our close followers for being absent from our frequent posts on this blog. We have gotten our hands full lately and we are announcing that we wouldn’t be able to give you the usual daily commentary on the market’s heartbeats but we will be providing weekly snapshots on the market. We also believe that this will help you think longer term on your taken market positions; where the real profit is. Thanks for following us.

BETWEEN BERNANKE’S HIGHLINE AND HARDLINE

The market was generally repressed yesterday waiting for the Bernanke’s speech later in the day. Taking cue from points emphasized by the Fed’s chief the markets rallied. While, the Chairman gave no clear optimism, Traders took his castigation of growing bond market gains and reiteration of keeping rates near zero till late 2014 as an indication of the Fed commitment to further monetary easing. Even though, U.S. has witnessed the most robust six-month job growth in 6 years, Bernanke’s main concern is still in sustaining this recorded employment gain. Juxtaposing the Bernanke’s highline and hardline may seem hawkish in the short run but if his cautions are confirmed in the mid-term, it will be hard landing for short-term speculators.

In the coming month investors should watch out for a dip in unemployment rate (as this has become the new stimulus for short-term market gains) or a renewed round of bond purchasing by the Fed. Barring unforeseen jitters from Europe or China, Dow may keep his hold on 13,000.

IT WILL BE CALLED PROFIT-TAKING!

The glamourous economic picture we are seeing since the year began is bearing a few taints. The first critical worry is rising Oil price which has been pushing gasoline price higher, and would be hurting consumer spending and firms’ earnings in coming quarters. Second is Chinese 7.5% GDP target released two weeks ago; an 8-year low, suggesting Asian economic slowdown along with Europe. This week data has indicated slack in iron ore demand, slowdown in Chinese manufacturing and there may be more before the quarter run out next week. I have got no crystal ball but I see the markets giving up their sterling heights in the week ahead. In the month, Gold has turn down, major currencies have added no significant gain, the VIX (fear index) is at 3-month low, the equity market has stalled and shedding off some heights since monday. Technically, we are pretty overbought! All we need is one huge fundamental blow from anywhere. It may be U.S. Next week’s economic calendar is full of U.S. top data. Watch out! it will be called profit-taking!

A FOR APPLE

I have been watching Apple price surge since the beginning of the year with some dose of remorse; bought some 2,000 shares early January at $420/share in a paper trade. I could have done a year’s job holding on to that position on a real account. The share has gained some 43% since then riding on a renewed tech boom, improving economic outlook, a bullish market, solid quarter earnings report, a superb balance sheet position, the introduction of iPad 3 and the company’s indication of share buy-back along with dividend pay-out. Investors and traders have cheered all these to make Apple the market’s new beautiful bride. Nevertheless, the future outlook still looks bright for Apple share price as these aforementioned fundamentals are poised to keep developing though there could be technical bumps. In the last one year, Apple has come from a low of $300 and may touch $1000/share backed by its share buyback programme.