from MM
IBP Update: Market rally under pressure. Sell stock that is down from buy price. Those moving slowly consider removing them. Will update again tomorrow.
MM
MM
posted by Learn2win at
12:52 pm
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The US market has gone into a correction on Thursday, when the leading stocks broke down on huge selling volume. Leading stocks like Google, Baidu, Dry Ships, Diana Shipping all came down hard.
The leading US index, Nasdaq, sliced thro' its 50day moving day average on huge volume, signifying institution selling.
Unless Singapore market can decouple from US market, this might be a time to be prudent on investments on Singapore stocks. It might be prudent to go back in cash. I have just gone back into cash today.
This is not a buy or sell recommendation. Just to let you know that market trend has changed in the US.
Your opinion can vary and are welcome.
Regards,
MM
Date - Nov 20 2007
Today there is a dramatic reversal in Asia. From a big loss in the morning to gains in the afternoon for most Asian bourses. Take a minute for a flashback, is this similar to Aug 17??
Our "spineless" market is being played by the BBs. Watch the US indices closely tonight. If Nasdaq closes up more than 2% with higher volume than last night, this will mark the beginning of a new uptrend as this will be a classic follow thro' day I am waiting for.
Please note that NOT ALL FOLLOW THRO' DAY results in an uptrend for several weeks but NO HISTORICAL BULL MARKET UPTREND has EVER started without a follow thro' day. Kindly note the difference.
If it does signify a change in trend, put in only 40% of your money first. In a week's time, when there is no more significant declines, put in another 40% and the last 20% should be in by the 3rd week when this trend gets stronger.
If however, within the one week after follow thro' you see a drop of more than 2% in the leading index, cut and run. Historically, another big decline after a follow thro' day has always resulted in a failed rally. The most recent one being the follow thro' day on Aug 7. ON Aug 8, BNP Paribas announced more subprime losses and the index tanked. If you cut out again, you would have saved a lot of grief when the market finally bottomed on Aug 17.
U may think why so much trouble to cut in and out of the market when the correction is so short. It is so short ONLY BECAUSE this has been the trend so far this year and has made more and more ppe. complacent.
If you don't believe me, try averaging down after the dot com bubble burst which took a full 3 years to deflat or when during the start of the Asian currency crisis in 97. It took a full 13 months before the market finally found its bottom in Aug 98 with STI at 800pts. If you stayed invested and continued to buy and averaged down, you would probably have had a heart attack by Feb 98, with another 6 more months of decline to go.
This is NOT A SELL OR BUY RECOMMENDATION. Just my strategy on how to deal with the markets. Using this strategy, I would still have purchased my stocks cheaper than when I sold it when the market broke down.
Happy Investing,
MM
11/30
Stock Market Shows Resilience After Powerful Shift
BY JONAH KERI
INVESTOR'S BUSINESS DAILY
Posted 11/29/2007
Stocks took a breather Thursday after two days of powerful gains that indicated a shift in the market's trend.
The Nasdaq ticked lower early in the session, then recovered to gain 0.2%. The Dow industrials also added 0.2%, while the S&P 500 ticked up less than 0.1%. The NYSE composite pared its losses, but still shed 0.2%.
Volume fell 19% on the NYSE and 11% on the Nasdaq compared with Wednesday's elevated levels.
The session marked a healthy, quiet follow-up to Wednesday's action, which served as a follow-through day for several indexes.
The Nasdaq, S&P 500, NYSE composite and Dow all hit new lows Monday, resetting the count on their respective rally attempts. But the IBD indexes — the IBD 100 and IBD Weekly Review 85-85 and New America all held above their prior lows.
On Wednesday, the IBD 85-85 index vaulted 3.3%, the New America 4.2% and the IBD 100 4.5%, as volume surged market-wide. Those values, which are posted late in the day, signaled a follow-through session for each of those indexes. The big-tech Nasdaq 100 jumped 3%, also following through.
IBD analyzes its proprietary indexes every day to help track the action of the stock market. Though we haven't formally used them to signal follow-throughs before, they greatly contribute to our understanding of the market's health, day in and day out.
In September, there were many days in which the market moved sideways. Meanwhile, the IBD indexes shot up. That surge revealed the true nature of the market: A climate in which growth investors could bank solid profits.
What they're now showing is power among the leaders, alongside deceptive strength in the broad market.
Dozens of leading stocks jumped in brisk trade Wednesday. A number of leaders held up well during the market's correction, finding support above their 50-day moving averages, or in a handful of cases, rebounding to new high ground. Those are bullish signs for growth investors.
Also, while many indexes hit new troughs Monday, the NYSE advance/decline line did not.
With that said, note that not every follow-through launches a big rally. Don't get too aggressive and overextend yourself on margin. Look for top stocks setting up in bases or bouncing off key support areas.
Say you're investing $10,000 in a stock. When the stock breaks out past an ideal buy point, take a half position of $5,000. If the stock rises another 2%, buy another 30%, or $3,000. If it goes up another 2%, fill out your position with the remaining 20%, or $2,000.
The idea is to go in gradually. Let the market prove itself.
Market Rally Under Pressure - MM
Stocks Skid As Nasdaq Slices 200-Day
BY JONAH KERI
INVESTOR'S BUSINESS DAILY
Posted 12/17/2007
Stocks fell hard Monday, as the market continued last week's string of ugly down days.
The Nasdaq skidded 2.3%. The NYSE composite slid 1.7%, the S&P 500 1.5% and the Dow industrials 1.3%.
Volume picked up across the board. It rose 13% on the NYSE and 2% on the Nasdaq compared with Friday's levels.
Monday's negative action, combined with last week's rough sledding, prompted a change in today's Market Pulse. It now shows the current market rally as being under pressure.
On Dec. 11, the Federal Reserve cut interest rates by a quarter-point, issuing a gloomy economic forecast. That triggered a distribution day for the major indexes.
The next day the Fed announced it would auction funds to help banks make good on short-term loans. Stocks gapped up powerfully. But the market soon turned jittery that day, swinging from positive to negative before finally settling for moderate gains.
That marked a change for the market, which had been sensitive to the latest headlines. Now stocks were selling off on ostensibly good news — in addition to the negative stories.
Three straight down days followed, leaving the Nasdaq below its 200-day moving average. The Dow also sliced its 200-day line on Monday. The S&P 500 and NYSE composite both violated that support level last week.
IBD's proprietary indexes have fared better. But the IBD 100 still has its share of problems — it tumbled 4.5% on Monday.
Another factor working against the market was the action of leading stocks.
Most of the stocks that fared well over the past couple weeks were the same names from the previous rally. Those stocks typically bounced off key support levels. Very few carved brand-new bases and staged powerful breakouts. Ideally you'd like to see the market rotate in new leaders when a new uptrend emerges.
Of the few stocks that did break out, most struggled to make any headway. Mindray Medical (MR) broke out of a double-bottom-with-handle pattern last week. But that breakout quickly failed. The stock plummeted 10% on Monday, undercutting its 50-day line.
LifeCell (LIFC) broke out to a new high Dec. 6, only to turn tail. That stock swooned 6% on Monday, also slicing through its 50-day.
Meanwhile, several top-rated big caps, which had held up over the past few days, finally came under pressure.
Those names include Apple, (AAPL) down 3%, and Baidu.com, (BIDU) which shed 9%. Google (GOOG) also dropped 3%, closing below its 50-day.
In this kind of climate, exercise caution. Cut losses quickly, never letting a stock fall more than 7% from your buy point. Consider taking at least partial profits on winning stocks. Avoid new buys entirely, until you see the market show convincing signs of strength.
STI 9000??? From BT
Published February 27, 2008
Spot on with the near-term calls
The principle behind technical analyst David Bensimon's accurate forecasts lies in the symmetries in markets, reports GENEVIEVE CUA
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MAKING forecasts is a tricky business, as many analysts and fund managers will tell you, but it does not faze technical analyst David Bensimon. Some of his calls on the markets have been so precise that on one of his speaking engagements, it spurred an impromptu bidding war among some in the audience for an on-the-spot copy of his award winning tome on markets, Polar Perspectives.
Mr Bensimon: Asia is in for a prosperity-driven inflationary era
One of the bidders paid for his copy with a gold coin. Worth about US$700 then in November, it was about equal to the price of the book. But the coin has since appreciated, as Mr Bensimon notes with amusement.
The book last year won a gold medal as the 'best book in finance/ investment/economics' at New York's annual independent publishers awards.
Mr Bensimon's fundamental view is that most of the world - Asia in particular - is in for a 'prosperity-driven inflationary era' over the next few years, notwithstanding the jitters over the credit crisis. His long-term view, for instance, is that the Straits Times Index (STI) will hit 9,000 and the Hang Seng Index 100,000 by 2012; and gold will climb to US$2,600 an ounce by 2014.
He has set up a fund to invest according to the themes of his book. One of his first investors is Stephen Riady of the Lippo Group.
His forecasts may sound quite incredible, until you learn of his near-term calls on markets which have turned out uncannily right. Last October, for instance, he told an audience in Singapore that the STI would fall 15 per cent from its level of 3,900 then to 3,300 shortly. The index fell from 3,906 to 3,306 within six weeks of his call. In The Business Times in August, Executive Money quoted him as saying that the STI would fall to 2,800; the index was then at 3,300. It fell to a low of 2,866 in January.
The principle behind Mr Bensimon's calls lies in the proportionalities and symmetries in markets, which he sees as functions of 'phi', also called the 'golden mean'. This is expressed in the number 1.618 and its inverse 0.618. As he sees it, these symmetries permeate markets, and this is evident in the scale of market rises and even in the pattern of retracements across time. His calls have gained a following among banks, traders, hedge funds and private individuals.
The outcome of a forecast, he says, is not cast in stone but is based on probabilities. 'The power comes not from saying that markets will do this or that. It comes from recognising that different alternatives can unfold,' he says. 'The benefit is not to say the market might go up or down, that's not of value to anyone. The value comes from being able to say that if the market chooses this northward path, it will go this far and no more. If it takes the southward path, it will go this far to a target.
'My speciality is to provide clients with a magnitude of duration and time, of price and specific levels and dates . . . March does provide a broad turning point that crosses different markets, not just the STI or equities but across a spectrum.'
He believes the STI, currently trading at the 3,077 level, could still face yet another downdraft. It needs to exceed 3,300, he says, to confirm that it is out of the woods. Until then, there is a 'distinct risk' that it could fall another 15 per cent to 2550, which will be a buying opportunity. 'In Singapore if we break the 2,850 level, the next level down is 2,550 which seems a little far and rather cheap. But these motions are driven by panic and over-extension on the downside. But I'd be happy to invest anywhere from 2,800 to 2,600 because at those levels, it's really very cheap.'
He said: 'One of the benefits of looking at the very big picture history is that it provides a degree of comfort and confidence that when we are in a corrective mode, instead of being worried and panicking, we can be comfortable that we know what the rhythm is and can recognise the relationships. We know we'll get to the ultimate target of 8,800 or higher several years from now, and there are natural levels to re-enter the market.'
His view is that Asian markets - Australia, Shanghai, Singapore and in particular, Hong Kong - will move in synch upwards. 'Asia will benefit from the huge fundamental growth and prosperity sweeping across the region, that is not in any way harmed by the slowdown in the US. Asia now has enough internal demand and intra-Asian trade and infrastructure and consumer spending that it has a life of its own.'
He notes that historically, in past US recessions, the stock market has anticipated a recovery and rises well before the recession ends. 'There is no impediment to have markets bottom in March, and have them recover sharply even if a recession technically continues in the next few months.'
His views on oil and gold are positive but not equally so. He expects oil to reach US$125 a barrel this year and to move sideways for two years. 'We're still en route to US$125, but the big story is that once we reach US$125, everyone will scream that we're on the way to US$200 and that's not what's going to happen. '
The catch, too, is that consumer prices will not be adjusted downwards during the consolidation period. 'The margins for products will be fabulous and will power the stock market to much higher levels because the reduction of the oil price will translate directly into the bottom line for corporates in the industrial and financial sectors, telecom and blue chips. They'll all be lifted by prosperity.'
He is bullish on gold in the long term but expects some consolidation this year before it moves to US$1,030 an ounce in 2009, and eventually US$1,220 in 2010. But the most rapid rise is expected between 2011 and 2014 when he expects the price to hit US$2,600.
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