US - Market Direction 01 (May 08 - Jul 08)

[LenaHuat]

2day I've aggressively pared down my portfolio of local stocks.

Too many humps are oredi visible on the road b4 the big one hits.

Hi Kenny, Foreman@Huatopedia where everyday is a huat huat day,

2-3 weeks ago, there was much talk abt whether we gonna see a "Double Dip".
I dumped aggressively the minute the news broke that HSBC's Chairman commented that the US economy was already in a recession. HSBC's comments are usually a very good barometer of the world economy.

Now everyday is a "What to do" day.
The distribution (going by O'Neil's book) is pretty severe.

[HengHeng]

Hmmm Beh ki jiu loh lor ..

Basically i'm looking at a major correction towards mid year and 3rd quater but it might happen earlier.

Based on your chart , the support point should be around 12230 which might happen expecially with the change in GBP forecast as well as a natural disater in china (rumors that another one would occur again).

[blid2def]

We're now in distribution/correction territory (US markets). Yes?

Got a message from MM as well (he's on vacation right now so isn't posting this week), suggesting that we're now in correction.

On a related note:

* NEWBIE ALERT *

Does anyone else keep his/her own track of the distribution day counts? If so, can you counter-check my own counts below to see if they tally with yours? Just an exercise for me to test my understanding of how to count them.

I used the following criteria / thresholds for my counts (all points must be satisfied):
(1) Increased volume over previous day
(2) Price did not close near the top (i.e. not a hammer; I used 0.5% off the top as threshold)
(3) Price closed > 0.2% below previous day's close
(4) Price closed down on the day OR Price closed with very little gain on the day (I used 0.5% margin between day's average versus day's close)

And I came up with:
Distribution Days (since April)
- S&P 500: 21 May, 20 May, 7 May, 30 Apr, 22 Apr, 11 Apr
- DOW: 21 May, 20 May, 13 May, 7 May, 29 Apr, 22 Apr, 11 Apr
- NASDAQ: 21 May, 7 May, 30 Apr, 22 Apr, 9 Apr

Ones in red give off the scent of the correction. I'm new to these counts, so I'd appreciate it if someone can let me know if I'm on or off the track. Thanks.

[winston]

Basically i'm looking at a major correction towards mid year and 3rd quater but it might happen earlier.

Based on your chart , the support point should be around 12230 which might happen expecially with the change in GBP forecast as well as a natural disater in china (rumors that another one would occur again).

Hi H2,

I think there would be a correction but I don't think the catalyst would be an earthquake in China. The sharp correction in SH 2 days ago was due to fund managers raising money to meet redemptions. The Shanghai market has rebounded strongly from it's range low in February and some of the retail investors are redeeming their mutual funds.

As for HK, I think it is due to renewed short-selling. I will be able to check the stats later today.

Having said that, I think it is a trading market. I'm buying puts on the indices whenever it rebounds
and sell the puts when it drops sharply the next day.

Take care,
Winston

[kennynah]

Dearest L :

u r an astute investor and your recent actions to release before this carnage must have saved you plenty... good for you

i never realized HSBC chaiman's comments are so influential.. ok, i will watch out for that in future...thanks.

2day I've aggressively pared down my portfolio of local stocks.

Too many humps are oredi visible on the road b4 the big one hits.

Hi Kenny, Foreman@Huatopedia where everyday is a huat huat day,

2-3 weeks ago, there was much talk abt whether we gonna see a "Double Dip".
I dumped aggressively the minute the news broke that HSBC's Chairman commented that the US economy was already in a recession. HSBC's comments are usually a very good barometer of the world economy.

Now everyday is a "What to do" day.
The distribution (going by O'Neil's book) is pretty severe.

[HengHeng]

well i'm not saying it is a catalyst but it would affect the market's sentiments especially the buying mood of china as people look into other issues.

For the US economy , i'm pretty sure that alot of US banks are "over leveraged" and are running paper losses well and above their asset holdings and with margins upped , future growth might be hampered.

Which might poise some problems sooner or later. I'm not sure on how creative accounting can help people from covering up this losses but i'm pretty sure it will leak sooner or later.

[millionairemind]

Managed to sneak away from the Junior bumper car rides that my son is taking to find a ultra-slow bandwidth cybercafe...well, anything is fine as long as I can post..

Market just went into a correction last night. I will post more when I get a chance this weekend while at home to grab the charts etc...

In the meantime, I have closed all my long positions with the help of my broker and started my short positions.

What I have seen thus far when US mkt goes into correction is the 1st 1-3 days the Asian mkts will not be heavily shorted... the heavy shorting comes in the 4-8 day when the indices can tank more than 10% in 4 days.

Good luck to all still vested... This is not a buy or sell recommendation.. just a note from a friend who is a trend follower and do not wish to see ppe. lose money..

Cheers,
mm

[rooster]

Hi All,
Are you shorting individual stocks or are you shorting the index like SIMSCI? Or are there other instruments for Shorting... your humble student.

[LenaHuat]

Hi K

Thanks for your kind remarks and a bigger TQ to the Chairman, HSBC.
In my experience, the Chairman's words (&only the Chairman's) carry alot of weight.
A consumer bank is very different from an investment bank in the likes of GS, BS, ML or MS. A consumer bank is much more broad-based and they depend much less on churning of derivatives or M&A etc to drive their revenue. It's a 'regular' biz. Moreover, HSBC is Europe's biggest bank. It's feel of Asia is also excellent. I always lend him my ears .

Must say that his remarks save me a bundle.

[kennynah]

GR :
you posted

Distribution Days (since April)
- S&P 500: 21 May, 20 May, 7 May, 30 Apr, 22 Apr, 11 Apr
- DOW: 21 May, 20 May, 13 May, 7 May, 29 Apr, 22 Apr, 11 Apr
- NASDAQ: 21 May, 7 May, 30 Apr, 22 Apr, 9 Apr

my quick review on D days:

sp500 =
22apr(initially appears to be so, but the next day on 22may was negated by an even higher Volume on up index)
30apr onwards clearly shows Distributions ever since !!!
7May (yes...very high volume on down day)
13May(especially clear its a distribution)
20may and 21may (super confirmation)

i take sp500 as the mother index.... follow this one, for me, is quite sufficient clue.

a note on Short stocks...especially techs...

there's a lot of M&A ongoing, eg CRM was bought up, who knows which will be next.

if someone naked short (with no durex protection), better dont caught if that counter gets an overnight offer and next day price jump sky high... then it's hong kong situation...

frankly, i dont believe in shorting stocks...i prefer to buy Puts instead...limited risk and just as bountiful potential rewards