Enter or Exit Stock Market with S&P500 at Historical High Now?

Ein55 Newsletter No 034 - image - S&P500

After breaking the triple top resistance of 2100, short term S&P500 becomes very bullish, setting new record high each day. Current US stock market is only suitable for short term trader to apply breakout strategy, buy high sell higher with trailing stop.

When S&P500 enters danger zone of >75% Optimism again, any future crisis could potentially become the next global financial crisis. Since global stock traders have not reached the euphoric stage yet, US stock market could remain bullish, sustainable if there are intermediate cooling measures, eg. news of US interest rate hike or another regional crisis, while the US economy is still growing.

Short term bullishness of S&P500 (another historical high at 2163), winning of Japan Prime Minister Abe (more QE is expected), lower fear factor (VIX is at low), have helped the global stock market to recover and achieve short term high. The trend is ideal for short to mid-term trading. Even Malaysia has lowered down the interest rate, this could be a gradual growing bull market.

For long term investors, it is important to learn to take profit at the right time, so that there is enough cash, which is king, to buy blue chip stocks at low price during the next global financial crisis.  For value investors, it is possible to hold the stocks without selling with condition that these are truly giant stocks, which the business can still be profitable even during economy recession.

 

 

Stock & ETF Investing Opportunity in BRICS – Emerging Countries

Ein55 Newsletter No 026 - image - BRICS

Due to global economy slowdown in the last few years, stock markets in the emerging countries have suffered significant corrections, resulting in Level-3 (country/region) crisis.  The leaders of emerging countries are BRICS (Brazil, Russia, India, China & South Africa), stock prices are now at very attractive prices.  When the global economy starts to recover and accelerate, these emerging stock markets will benefit as well.  One could use ETF to trade or invest global stock indices.

Due to economy and political instability, Brazil stock market now is at 18% Optimism, after 57% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - Brazil

Russia has suffered from falling in global oil price, economy is severely affected. Russia stock market now is at 16% Optimism, after 65% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - Russia

India is relatively stronger compared to other BRICS, stock market now is at 34% Optimism with only 13% correction in stock prices (see chart below).

Ein55 Newsletter No 026 - image - India

China is world No 2 economy, although Optimism is similar to India at 34%, stock prices have heavily corrected by 43% after the last round of speculative bull run, falling down from peak of 5200 points (see chart below).

Ein55 Newsletter No 026 - image - China

South Africa is relatively smaller in economy size, Optimism now is at ideal 25% Optimism with only 20% correction in stock market (see chart below).

Ein55 Newsletter No 026 - image - South Africa

The level-3 crisis and opportunity mentioned above requires longer investing strategy because global economy recovery is a gradual and longer term. Political economy is also crucial for the recovery of stock markets.  BRICS have to compete with US which is now at moderate high Optimism of 68% (see chart below) with more bullish economy, challenging the next historical peak in stock prices.

Ein55 Newsletter No 026 - image - US

If there is still a last global rally in stocks, BRICS may recover strongly with US stock market may rise to new historical high.  Other smaller emerging countries stock markets (eg. Southeast Asia) and many individual stocks may follow BRICS as well. However, after the next bull run, there could be another perfect storm waiting ahead, level 4 global financial crisis may severely injured all the global stock markets, both US and emerging counties. The ability to know when to sell to take profit will be crucial.

 

 

Strategies for 3 Personalities of Traders and Investors to Profit in Bearish Stock Market

Ein55 Newsletter No 018 - image - success

Many traders and investors lose money in the past few months during global stock market correction.  With STI < 2600 points, there is a strong fear in the market. I have clearly pointed out in the past that greed and fear will continue to influence people to make wrong decisions.  We need to position our investment, choosing stocks with different characters, aligning with our personalities.

Here are suggestions of trading/investing strategies for 3 unique personalities (Short / Mid / Long Terms) to profit from the current bearish stock market with 4 decisions of Buy, Hold, Sell/Short, Wait.

1) Short-Term Trader (buy/sell every few weeks)

Strategy: Short / Wait.

Choose stocks with weak fundamental and bearish trend for the past few months (aligning with major stock indices), short with CFD for stocks at high optimism to profit from the falling market.  Most people only know how to long the market, therefore either lose money or doing nothing in the past few months of bearish market.  Trading could be 2 ways (long / short), as long as the trend is clear, either bullish or bearish markets could be opportunity to make money.

If shorting (requires training) is not a preferred style, those who want to buy low sell high, has to wait for a few more weeks for the global stock market to recover for short term, then long on stocks with positive trend. 

As a short term trader, not every day is a trading day, we need to wait patiently for the best opportunity of the weeks to long or short.  Short term trading is more speculative, reacting quickly to market news, therefore one has to apply Short-term Optimism + Technical Analysis (both price and volume) to have a high probability trading.

 

2) Mid-Term Trader (buy/sell every few months)

Strategy: Wait / Long.

The current market correction (20-30% for some stocks) is attractive for mid term traders who have higher risk tolerance level and looking for higher potential return than short term trading.  Since the short term trend is still bearish, one could wait patiently for the global stock recovery for the next few months, then buy those stock with strong fundamental stocks.

If your stocks are trapped in the stock market, likely now is at low optimism, too late to sell now.  Wait till the next rebound or rally above the support again, target to sell at intermediate high, either to minimize the losses (if bought too high last time) or making some profit.  Apply Mid-term Optimism analysis with integration of Technical and Fundamental Analyses as main strategies.

 

3) Long-Term Investor (buy/sell every few years)

Strategy:  Wait / Long.

Usually long term investors need to wait 5-10 years (typical economy cycle) for global financial crisis to buy strong fundamental stocks safely at amazing low price, future potential could be 50-200% higher.  Current global market correction is still not severe enough, there is room for further correction. Therefore, long term investors should wait patiently, could be next 6-12 months, partly depending on the political economy, ones could enjoy the best performance as the golden investing opportunity could be coming soon.

Apply long-term optimism with fundamental analysis to start prepare yourself for this gift from heaven in near future.  Blue chips will have more than 50% discount in stock prices, most people will get panic but you could profit from fears of others.  However, investor has to accumulate bullets (cash) to have chance to buy low and sell high.

 

Fresh from Oven – Download eBook by Dr Tee: Global Market Outlook 2016

Ebook Cover 2016

I have just finished writing the eBook on Global Market Outlook 2016.  You may download from this link:
https://www.ein55.com/free-public-education-on-investment-programs-by-dr-tee/

Please feel free to forward the latest eBook 2016 to friends. You and your friends are also invited to attend the workshop on Market Outlook 2016, next 2 dates will be on Nov 26 and Dec 20. See below for details of registration.

====================================
Table of Contents
1.  Mass Market Sentiment Survey
2.  Review of 2015 Global Markets
3.  US Market Outlook
3.1  US Government Debt Limit
3.2  Tapering of QE3
3.3  Fed Interest Rate Hike
3.4  US Job Market
3.5  US Property Market
3.6  US Bond Market
3.7  US Dollar vs Commodity (Gold / Silver / Crude Oil)
4.  Regional Market Outlook
4.1  Europe Market
4.2  China Market
4.3  Hong Kong Market
5.  Singapore Market Outlook
5.1  Singapore Stock Market
5.2  Singapore Property Market
6.  Conclusions and Recommendations

 

Profit in Stocks from Commodity Market Cycle (Oil & Gas, Palm Oil, Mining, etc)

Commodity

Every major investment market (eg. stock, property, commodity, forex, bond) has its own unique market cycle. A wise investor could combine 2 market cycles of 2 different markets to maximize the potential gains.

Currently, regional stock markets have diversified performance.  Major economy such as US, China and Germany are still at moderate to high optimism levels.  At the same time, countries with GDP depend heavily on commodity, eg. Malaysia, Indonesia, Australia, are suffering in slower economy due to declining commodity prices.  Their stock markets are at low optimism level now, risk seems to get higher with political uncertainty and weaker currency.

The recent free-fall in share price for Glencore, major global commodity stock is an alert to the whole world, both commodity and stock markets. At the same time, local commodity related stocks such as Oil & Gas (Keppel Corp, Sembcorp Marine, Ezion, etc), Palm Oil (Golden Agri, First Resources, Wilmar), as well as overseas commodity related sectors (eg. mining in Australia), are recording huge correction is prices over the years.  This could be a rare opportunity to buy during a crisis but many people do not know how to take this advantage.

The secret of making money in investment is simply Buy-Low Sell-High. However, most traders and investors are too normal, therefore their emotions will swing with the market news, ending Buy-High Sell-Low.  Commodity related stocks locally and globally are very attractive in prices but whoever dare to buy, could end up buy low and get lower, eventually may sell lower due to fearful outlook. The dilemma is how to measure low and high, how low is considered low? It has to be 20%, 50% or more discount in price?

In the past few years, STI component commodity stock, Noble Group, share price has been declining from over $2 to about 40 cents now, more than 80% correction in prices.  At which level, share price may be supported?  When is the right time to enter?  The decision requires good understanding of fundamentals of commodity and stock market cycles.  Commodity market cycle now is in winter season while stock is near to summer time.  A wise trader or investor would align these 2 unique market cycles in one’s trading plan or investing strategy.  There is a limit in falling in price, as long as the reason is not due to fundamental of company is getting worse, eg. declining business with little asset or cash to pay for excessive high debt.  Not everyone is master of fundamental, therefore a stock price could be over-corrected based on declining in business (eg. due to commodity market downturn).  For the case of Noble Group, the accusations by Iceberg Research and Muddy Waters, resulting in share price falling below $1, all the way to 40 cents, is mainly a reflection of traders’ fear.

The safest time to buy a stock is when everyone is afraid the sky will fall down while the business is still operating normally with consistent performance. Such opportunity requires patience.  Opportunity of fortune is for someone who is prepared.

 

Global Stock Market Crash?

Ein55 Newsletter No 017 - image - Market Crash

Global stock markets of 4 major economy: US, China, Japan and Germany have achieved 75% optimism. Therefore, it is not a surprise to see major correction in the past 1 month. We should follow Optimism from Level 1 (individual stock) to Level 2 (sector) to Level 3 (country/region) to Level 4 (world).

Although Singapore STI and Hong Kong HSI have been only 50+% optimism in the past few years, they are smaller market, we need to follow a bigger market to evaluate our probability of success with Optimism. High optimism = high risk, 75% World Optimism means the chances of falling down is 75% while there are only 25% chance to go up. Don’t over-trade or over-invest, keep at least 75% cash as world Optimism has reached 75% optimism. If we follow the rule of money management, taking profit with higher optimism, the risk could be minimized.

For those who want to grab on the opportunity of falling giants of global stock markets, adding Technical Analysis (TA) will be helpful because the falling knife could be severe, your personality may not be suitable to buy low with downtrend. Regardless it is a major correction (mid-term) or Level-4 (world) crisis at longer term, we should consistent to buy low (either long term, mid term or short term) and sell high later. If we could diversify over 10 different giants (through Fundamental Analysis, FA), even if the giants fall down, the chances of recovery is very high especially if the price correction is mainly due to the human greeds and fears (Personal Analysis, PA), not the FA (economy or company business performance).

TA = FA + PA

 (Share price is a reflection of business performance and traders emotions)

We shall continue to apply this FTP (FA + TA + PA) analysis around the Optimism Strategy to profit from the global stock market in a safe way. There is no need to guess the direction of the market, low enough, we could enter; high enough, we will exit. The low and high shall follow our personality for short term trading, mid term trading or long term investing. New Level-3 giants are falling down (eg. Malaysia, both stock and currency markets), grab on the opportunity to time yourself with consideration of Level 1-4 Optimism.

 

 

 

Q3/2015 Global Stock Market Correction: Mid-Term Opportunities to Buy Low Sell High

Chart of Global Stock - 2015-07-07

On 8 Jul 2015, I shared a newsletter when many readers were troubled by the global stock market correction (which turned out to be a mid-term low point if you compare with later second chart).  Figure above shows that in the past 1 month with charts till 7 Jul 2015, global stock market encounter series of negative news, from Greece crisis, bullish turned bearish China market, to speculation of possible US interest hike, etc.  As a result, most traders get worried, following herd mentality to exit or dare not enter the stock market again, especially observing more than 30% correction in China SSEC index.

After 1 week later, now (as of 15 Jul 2015) the global market has regained the confidence after Greece crisis has a new political solution, China stock market is strongly supported by the government. The figure below shows a strong rebound in global stock market. The last fearful point on 8 Jul 2015 happened to be a low valley.

Chart of Global Stock - 2015-07-14

 

“Normal” retail traders would wait for friends around them to make money first, after share price is up more than 10%, only then having the confidence to enter the stock market at relatively high price.  This is happening in China stock market now, those who got burnt with earlier 30% fall, some start to try their luck again with rising price.

Similarly, when market turned bearish, most people are losing money, despite significant discount given, majority of the traders would prefer to wait.  They have to pay for premium in price to exchange for confirmation in trends to overcome their fearful emotion.  The mentality of buy high sell higher depends on the support of market speculation which may not be sustainable. Any major global news could potentially erase the speculated gains overnight.  Since we cannot accurately predict the future, we need to always buy low sell high to put ourselves at low risk, regardless you are a short term trader or a long term investor, only difference is just the timeframe of interest: buy low sell high for 1 month or buy low sell high for 5 years.

In a bullish stock market, as long as the optimism level is not too high, every correction due to bad news is an opportunity for safe entry for mid-term trading.  Investing Master, Jim Rogers’ open secret of success is “Buy Low Sell High”, but how low is considered low? The world’s richest investor, Warren Buffett, has a famous saying of “Be greedy when others are fearful”, but how fearful is considered too fearful?  The Ein55 Optimism Investing Strategy developed by Dr Tee will provide the answers.

 

Buy or Sell in May 2015 with Bullish China and Hong Kong Stock Markets?

For a complete understanding of the investment market, we need to perform 4 levels of analysis:

L1 = individual stock, L2 = sector / industry, L3 = country / region, L4 = world.

These 4 levels will interact with one another to generate the complex stock market responses.  From the past 5 years of regional stock indices (see Figure) in Singapore, China, Hong Kong and USA, we could observe the following important trends and correlations, which could help us in making the right positions for the next 1 year:

1)      In the earlier stage, due to different political economy policies, US and China have been diverged in the trends, China has been bearish after the tightening of cash supply since 2009 while US has been consistently bullish after QE 1,2,3 with near-zero interest rate.

2)      In the past 1 year, supported by strong recover of economy, US could still maintain the uptrend in stocks, continue to create new record high in stock market for S&P500, Dow Jones Index and Nasdaq.

3)      With tapering of QE3, risk of domestic inflation is lower, China could loosen the monetary policy to accelerate the growth of economy, resulting in the recent rally of SSEC index from 2000 points to 4500 points, sentiment of market is very positive.

4)      Singapore (STI) and Hong Kong (HSI) are closely correlated like twin markets over the past few market cycles. In the past 5 years, variations between 2 markets are within 10%.  Fund managers and retail traders/investors know both market well, the fund could flow smoothly between 2 markets, although they are not officially “connected”.

5)      Both Singapore and Hong Kong markets are followers, sandwiched between US and China, world No1 and No 2 largest economy.

In conclusions, China is fast in catching up with the lagging performance, pulling Hong Kong up along the way, while Singapore is likely to follow the twin in this rally.

Want to learn how to position yourself to profit from the current rally in regional stock markets?  How far could STI, SSEC, HSI and S&P500 grow eventually?  What are the stocks with tremendous upside? You could find all the answers here through high-quality free public workshops by Dr Tee

Ein55 Newsletter No 015 - image - Correlation of 4 markets

Global Market Rally from Bullish Years of Horse to Sheep

As pointed out in my article 1 year ago, a stumbling Year of Horse 2014 is indeed a blessing in disguise.

https://www.ein55.com/2014/02/stumbling-year-of-horse-a-blessing-in-disguise/

Year of Horse had a rough start but having a nice yearly performance as predicted 1 year ago. All the major global stock indices show positive yearly return, ranging from 10% to 50% gains (see graph below), despite uncertain stock market conditions at that time with gloomy QE3 tapering and China economy slowdown.  As predicted, China Shanghai Stock Index (can be traded with A50 ETF) at 2000 points was a strong support as few country indices with strong fundamentals could have such a low optimism.  Final results show that China Shanghai Index has experienced 70% rally from 2000 points to 3400 points, Ein55 market optimism strategy has successfully predicted this golden opportunity.

In addition, Temasek Portfolio with undervalued low-optimism have recovered successfully, eg, SMRT ($1 to $1.80), NOL (recovering from price valley), Capitaland ($3 to $3.60), there are many more “Temasek Giants” are waiting for recovery:

http://www.temasek.com.sg/portfolio/portfolio_highlights/majorportfoliocompanies

My investing philosophy is to look for investment giants, patiently waiting for the giants to fall down, helping the giants to get up, finally saying goodbye to the giants who will then reward us substantially for the help given. Learn how to position yourself to benefit from the stock market recovery, there are many falling giants from various sectors (oil & gas, retail sales, casino, palm oil, mining, etc) in many countries who are waiting for recovery.

Similarly in the Year of Sheep 2015, the stock market is again uncertain with predictable US interest rate hike, bearish global commodity market (including oil crisis), gloomy European market due to Greece deadlock and massive ECB quantitative easing.  Risks are opportunities in Year of Sheep.  In a bullish market, every risk will result in market correction, which can be a safe entry point.

To better understand the risk and opportunity in Year of Sheep 2015 for stocks and properties, you and your friends may attend my next free investment workshop (both English & Chinese versions are available, solid 3hr knowledge sharing), register through the link below:

https://www.ein55.com/free-public-education-on-investment-programs-by-dr-tee/

Wish all the readers a successful investment in the Year of Sheep 2015!

Ein55 Newsletter No 013 - image - Year of Horse Performance

 

全球投资市场:万马奔腾至三羊开泰

在一年前的马年市场展望报告,我准确地指出,马失前蹄乃塞翁失马、焉知非福。

https://www.ein55.com/2014/02/stumbling-year-of-horse-a-blessing-in-disguise/

马年开市不利,不过后劲十足,就如我所预言一年前。所有主要全球股票指数,全年正数回报,获利介于10%至50%(看以上图表),纵然当时QE3乌云密布,中国经济缓慢。正如所料,中国上证指数(以A50 ETF交易)于2000点是强有力的支撑,因为鲜有强国处于如此低乐观指数。结果,上证指数经历了70%的飞腾,从2000点回弹至3400点,Ein55市场乐观指数策略成功地预测了这个良机。

除此之外,被低估的低乐观指数之淡马锡投资组合已经成功恢复,例如SMRT ($1 至 $1.80), NOL (从谷底翻上), Capitaland ($3 至 $3.60),还有更多的“淡马锡巨人”正在康复中。

http://www.temasek.com.sg/portfolio/portfolio_highlights/majorportfoliocompanies

我的投资理念是寻找投资巨头,耐心等待巨人倒下,然后帮助他东山再起,巨人将感恩图报。

学习如何定位自己,从股市复苏中受益,静待许多国家的各行业(石油/天然气、零售、博彩、棕榈油、矿物等)的重挫巨人再崛起。

同样地,在2015羊年,股市也是不稳定,包括可预测的美国加息,全球商品市场低迷(包括原油危机),阴郁的欧洲市场(希腊僵局、欧洲央行大规模量化宽松政策)。每个风险是羊年的良机。牛市中,每个风险会导致市场调整,恰也是一个安全的入市点。

为了更好地理解2015羊年股票和房地产的风险和良机,您与朋友们可以参加我的下一个免费投资研讨会(可选择英文或华文版,3小时充实的知识分享),通过下面的链接进行注册:

https://www.ein55.com/free-public-education-on-investment-programs-by-dr-tee/

祝贺所有读者一个成功的投资年,羊羊得益!

 

 

 

 

 

Risks are Opportunities in the Year of Sheep 2015: China Market Rally and Crude Oil Crisis

Happy New Year to all readers.  Here are some new updates on current market outlook (supplements to eBook on Global Market Outlook 2015) when we welcome the Year of Sheep 2015.

1) China Market Rally

As shared in several workshops and publications since 1 year ago, 2000 points was a golden entry point for China SSEC Index (through A50 ETF) as it was at 25% Optimism, a rare opportunity for a major country index to be corrected.  Indeed, in the past few months, after the Shanghai and Hong Kong stock markets are connected, it provides a reason for the traders and investors to push up the undervalued SSEC Index to 3330, appreciation by 65%!

Although SSEC or A50 still has more than 50% growing potential (before reaching 75% Optimism), a safer  strategy now could be looking for individual undervalued stocks with low optimism (<25%) which are still lagging but having more potential to rise.

2) Oil & Gas Correction

Brent crude oil price has been dropping in the past few months, from US$115/barrel to the lowest of US$47/barrel recently.  Global commodity price index has been below 25% Optimism when crude oil was still above US$100, the unstable high oil price at over 75% Optimism was triggered by a complex interactions of:

2.1) Recovery of US:

The US dollar is strengthened after QE3 is fully tapered since Oct 2014, following by anticipation of US interest rate hike in 2015. USD and commodity (eg. gold, oil, etc) usually move in opposite direction.  With US unemployment rate drops to 5.6% in Dec 2014, the US recovery will continue in the next few years, oil will be under pressure.

2.2) Political Economy

There could be political considerations for oil producer vs oil consumer countries, OPEC and non-OPEC countries, conventional vs shale oil technology.  The demand vs supply principle of economy is disturbed, resulting in high volatility in oil prices.  The crude oil price is halved, the impact is as if a new form of global QE (Quantitative Easing) to stimulate the economy because the energy cost is lowered, there is more saving for spending or investing in near future, at the expense of oil producers who have accumulated significant reserves of wealth during the super bull run of oil from 1999 to 2014.

2.3) Trader Psychology

Profit taking or cut loss when prices drop from high point, resulting in falling-knife trend, few traders dare to catch to support the price.  With more hedging and shorting sentiments, the oil price will be under correction, following the old foot step of gold prices a few years ago.

A crisis is usually an opportunity, a blessing in disguise. Oil price has resulted corrections in many stocks in Oil & Gas, some are below 25% or even 0% Optimism, which usually only observed during Global Financial Crisis, not in the middle of a bull market. Commodity has a much longer market cycle (eg. 20-30 years), may not be aligned with economy cycle. Each investment market (stocks, properties, forex, bonds, etc) has different investment clock, % Optimism strategy could be applied to buy low sell high.  For long term Brent crude oil, 0% Optimism is at US$44/barrel, over-correction by the market will provide an excellent opportunity to both traders and investors but a proper strategy must be adopted, especially to overcome the market emotional swing due to short term volatility.  The timing of crude oil recovery then will be the timing for oil & gas related stocks.

The sector correction will be rotated from time to time among various industries due to imperfect market, following the Optimism level, higher one will have higher risk, lower one will have higher potential.  The oil correction will help the shipping sector (eg. NOL, SIA, etc) at low optimism to grow, higher outlook for profitability with lower energy cost.  The rally in China market will help the Singapore S-chips to recover gradually, especially after the China economy is improved further. The last example was severe Singapore REITS correction in year 2013 after 50% rally, now in recovery phase but will have limited upside due to increasing mortgage rate (anticipation of US interest hike) and gloomy outlook of Singapore property market.  Earlier example was storm in penny stocks, correcting many stocks, resulting in low trading volume due to negative sentiments.  Based on the survival of the fittest, each correction will make the “giants” or strong-fundamental stocks become stronger after recovery from the valley of lower price.  We want to look for giants who are falling down, helping them to recover at the right time, then the giants will reward us when becoming strong.

For those who are interested in the details of market outlook 2015 or Ein55 styles with Optimism Strategies, you may drop by to attend the next free workshops conducted by Dr Tee.  All the best to all in trading and investing for year 2015!