Friday, April 20, 2018

The Yield Curve is Flattening, why should investors be worried?

The Yield Curve is Flattening, why should investors be  worried?

The US 2 Year Treasury Yields is at the highest since 2008 at 2.42% and its spread on the 10 year Treasury Yields is narrowing resulting in a flat yield curve. The last time this happened  in 2006 was followed by the Global Financial Crisis in 2007.

This blog view remains that the more the Fed raises rates from here, the more likely the yield
curve is to flatten. Indeed, after having flattened significantly last year, in terms of the spread
between the two-year Treasury and the 10-year, the yield curve began to flatten again towards the
end of last quarter.  This is primarily because short-term rates have continued to rise based on rising Fed tightening expectations.

10-year Treasury bond yield is currently at 2.92 is threatening to reach the year high of 2.95 and could set the stage to take the 3% mark which would  signal to many chartist  the end of the disinflationary era which commenced in the early 1980s and which has, for the most part, proved extremely positive for the stock market. When inflation returns, stock would suffer a massive derating in terms of price earnings ratios as a result higher real interest rates.

All posts and charts are for educational and illustration purposes only
Wednesday, April 18, 2018

Best World - Fundamentals are Good but Price Action Shows Otherwise

Best World - Result due in  early May with analyst expecting upbeat results, management guided 20% growth target for 2018 backed by free cash flow yield of 6% and  trading cum dividend 2.6c.  All these looks rosy but today's price action suggest Big Boys could have distributed in March/April . Could rebound to 1.65 from current price 1.59 . If prices stay below 1.61 , it could go down to its next support at 1.55. A break below 1.55 could trigger a sell down to 1.46 and 1.35
All posts and charts are for educational and illustration purposes only
Friday, April 13, 2018

KSH - A Rebound Is On The Cards! Any News of the launch of Gaobedian project could revive the stock!

KSH - A rebound is on the cards! The company is likely to launch phase 1 of the Gaobedian Project this year after a pre-sales permit is obtained. The stock rallied last year on the potential wind fall from its 22.5% owned Gaobedian project located near the SEZ. The rally fizzled away as the market was uncertain of the timing of the launch of the project rumoured to be targeting up to Rmb 20,000psm. This theme could be played up again on any news of the project launch. On the Chart it could have seen its near term bottom at 0.61 and is due for a rebound to  resistance at 0.70 , 0.72 and 0.76

All posts and charts are for educational and illustration purposes only
Sunday, April 8, 2018

Dow Jones - Why I would be concern if it falls below the 200 Days Moving Average !

The 200 Days Moving  Average is considered a key indicator by traders and market analysts for determining the overall long term trend. The Dow has not broken the 100 days MA since 10 Nov 2016 and the 200 day MA since 16 Mar 2015. The last time Dow broke the 200 Days MA was on 20 Aug 2015 and 6 Jan 2016 and on both it loss 10 percent . The Dow chart has not look this bearish for a long time falling from Jan  high of 26600 to Feb low of  23290. The current obvious price action of consecutive swing points registering lower lows are indications of more weakness ahead. The current 20 Days MA sits on the 23476 level and if history repeats we could see a 10 percent drop to 21128. My charts are indicating the immediate support of the Dow at 23000 and 21680 respectively in the event the 200 Days MA is breached.
All posts and charts are for educational and illustration purposes only
Saturday, April 7, 2018

Rocky Week Ahead - These are the Big Events That Could rock the stock market

China said it was fully prepared to respond with a "fierce counter strike" to Trump’s  threat for $100 billion more in tariffs on Chinese imports. The week ahead promised to be high stakes with high expectations as earnings season heats up. Traders are expecting one of the best US quarterly  earnings season boasted by the implementation of  the  reformed US Tax to show its biggest quarterly profit growth in seven years.  The corporate reporting kicks off in earnest on Thursday and Friday with reports from several large financial institutions including BlackRock and JP Morgan.The fragile market could be  further upset  by disappointments . The most volatile U.S. stock market in two years will meet 3 major test in the coming weeks as first-quarter earnings pour in, announcements of the outcome of NAFTA renegotiation when Trump meets Mexico President and Canadian PM at the end of the week and Chinese President Xi speech on Tuesday for any reference to the Trade war .  

All posts and charts are for educational and illustration purposes only
Wednesday, March 28, 2018

Its Time To Say Good Bye To This Aging Bull !

Its Time To Kiss Goodbye To The Aging Bull
On 20 March when Nasdaq composite was at 7500 , I said on this blog that an `Island Reversal’ price action that occurred was an ominous sign that will lead  Nasdaq fall to 6900. Today 28 March we saw that happened. With heighten volatility and  markets apparently intent on retesting the lows set in early February, investors must now to prepare for a  far less forgiving investment environment.

The firm stable and quite uptrend of 2017 has changed  in last couple of months,
the leaders of last year’s bull market—Facebook, Tencent, Microsoft, etc.—are falling by the wayside with increasingly disturbing frequency. The market likely loses important FAANG leadership in Facebook. Facebook and their Cambridge Analytica  mined and sold our personal data, its so serious , its not going to come back this time. The FTC is looking into Facebook practices.   Remember the Internet bubble was burst by judge who threatened to break up Microsoft?  The market volatility spiked after a long quiet period in Feb and has since been  making lower highs on heightened, it’s a canary in the mine! Two-year treasury yields are now above the S&P 500’s dividend yield for the first time since mid-2008, and Libor is surging to a 3 year high make stock unattractive and raised the cost of doing business.
But some are so in love with this  bull market are understandably reluctant to kiss last year’s bull trend goodbye. If anything is going to re-ignite the aging bull flame, its going to be  lower interest rates and stronger earnings.  But rising business cost and inflation will crimp corporate profits. Meanwhile, a full-blown trade war will almost guarantee lower profits across much of the markets.
With inflation and interest rates on the rise , it looks highly unlikely that rates will fall in the near term under any scenario outside a recession and  a recession will prove detrimental for equities.

But at the moment it would take something of a leap of faith to buy into a resumption of the former bull-market-in-everything, it’s not easy to see how the flame could be rekindled.

The only time you can get bullish again which means buying in terms of a sustained leg up is if the Nasdaq Composite were to get back up to  break above the 7637 level  and hold above it. After all this bull have been led by the Tech sector.  The last thing I have to say is we will kiss the bull goodbye soon!

All posts and charts are for educational and illustration purposes only
Sunday, March 25, 2018

Well Wishes And Testimony That Warmed My Heart, Thanks Zavier!

After I lost all my money and owed $300k of trading debts 20 years ago, I told myself that if I ever made a comeback, I would want to share my experience to help newbies in their trading journey. Hence, ever since I had found success, I set out on a mission to impart my trading and a life skills to common people who are struggling to make ends meet, just like I was.  I believe this is a mission that can directly impact another’s person life, and hopefully bring new hope and blessing. Today, Zavier’s well wishes and testimony warmed my heart. It is really a great honour to have made a life changing impact on this young man’s life.

All posts and charts are for educational and illustration purposes only