29 Aug 05 Katrina "Buys" Oil

News that Auntie Katrina will be paying a visit to the Oil Rigs in the Mexican Gulf caused oil prices to go past $70 today... the Australian All Ords fell 1.3% (50 pts)... one of the largest down days I've seen... looks like things are gonna stay like that till Katrina leaves. Time to check out some puts...

28 Aug 05 Oil and Economy

Oil prices have fallen back to $66.13 after crossing the $68 mark...with that substantial drop in a day, its likely that some of those that didnt sell at $68 the last time round might be taking some money off the table. Technically, the chart looks more bearish - very likely to be a short term thing because there is simply no stopping it.... how will prices of a commodity that's slowly depleting ever come down? But in the short term, a correction in oil prices will give stocks some room to move.

So, any weak buy ups in oil is a sign that oil may not be staging another rally that soon. I believe that oil might be negatively correlated to stocks for some time. Use it as a confirming indicator and not the buy trigger.

Just 2 days ago, Uncle Greenspan made an appearance again... this time commenting on the housing (residential property) market causing the economy to be on shaky ground. He also pointed out that current interest rates are LOW... no prizes for guessing which way future interest rates are heading...

This kind of ties in together with what was mentioned at my Macroeconomics lecture last week. External factors such as rising oil prices will cause inflation to go up (assuming consumption remains the same) , and eventually, the interest rates as well.

And with the historic level of budget deficit, I'm wondering when Uncle Bush will start a contractionary fiscal policy.

Rising Interest Rates + Contractionary Fiscal Policy = Not looking good for the US economy.

"BULLS MAKE MONEY, BEARS MAKE MONEY, PIGS GET SLAUGHTERED"

26 Aug 05 Market Thoughts

The market's been pretty unexciting the past couple a days thanks to the continued sky rocketing of the oil prices... and the hurricane continues to do its thang...

THE NIKKEI RALLY
A few days back, the rally of a 160 points on the Nikkei caught my eye. A look at its chart showed that it has been rallying strongly since May. A constant sloping uptrend with very little volatility (or fluctuations). To date, it rallied a total of 1,600 points with 800 coming in the past 20 days to break the 12,000 mark. The rally reminded me of the one seen on the Dow Jones Utilities and Russell 2000 index.

Being curious about what's happening, I found an article on Reuters that reported net buying from foreign investors (i.e. funds etc) over the past week. But as I dug deeper and obtained the actual numbers, it showed that while there was net-buying from foreign investors, there was net-selling from the local retail investors.... talk about a case of weak hands... but cant blame those Japanese folks... they've been 'underwater' for a l...o...n...g... time. Going back further in time, the net-buying from the foreign boys started as early as May (maybe even earlier, but May was the earliest I have). Yeh, I was slapping myself for not spotting it w...a...y... back then.

Which makes me realise all the more I need a system that does the job for me, scanning as many markets and financial instruments as possible. I guess that's how the big boys can 'secretly' accumulate while the media focuses the attention of the herd on other things. And as the big boys begin their buy-up, which would most likely be fast since they can move the price faster with less money as most of the sellers would have disappeared. Its during times like these that 'catch' the attention of the media, which will in turn bring the herd.

US NOT PICKING UP YET
As I'm writing, the NASDAQ slipped 12 points... there goes my entry... so the Put-Call-Ratio was right afterall... and with any luck, we might see 2,100. Oil still looks pretty strong after coming up from the short correction from the mid-60s. A positive sign however, is that the equity indices are in oversold region on the oscillators. A cross above the 20% mark should see me monitoring them more tightly, but for the time being, I'd prefer to do some forex trading on my dummy acccount with OANDA. Maybe I'll talk about foreign currency trading in one of the future posts. Well, time to see how the market's doing...

20-Aug-05 Settling Down in Sydney Nicely

It's been almost a month and a half since I got here (Sydney) to pursue a Master of Commerce majoring in Finance. The days without internet access caused me to miss a nice rally in many markets (US, Singapore and Australia).

One stock that I couldnt take my mind off was Cosco (a Singapore stock). I sold it at S$1.84. At that time, a post on the Wallstraits forum mentioned that Cosco insiders sold their holdings at S$1.76 and that Cosco's run was coming to an end... I replied that I would be getting in despite that fact as long as the 'pros' are still gonna push it higher. Today, the stock is trading between S$2.4 and S$2.5; but I was internet-less and couldnt participate.... sigh.... well, there'll be other opportunites.

Capitaland (and other property stocks in Singapore) also made some impressive gains thanks to the announcement from the Singapore Govt that lowered the required deposit for new residential properties from 20% to 10%. That certainly caused the institutions to rush back into these stocks after they sold them some time back when property sectors in Hong Kong and Shanghai were tapering off.

An interesting observation I made recently was that Noble and Comfortdelgro have been very quiet these few months, and set me thinking about the reasons why the institutions have avoided them, and if there are tell-tale signs to it (e.g. profit warnings, stagnating earnings growth, institutional stock distribution, etc). I'll just have to leave this till later as I'm still working on several buy-triggers.

ON THE US FRONT

The US Market has been very quiet over the past 3 days. Volume has been declining as well. Both the 5 and 15 day stochastics are in oversold territory and we should see some movement coming up soon. The only unknown is how much is it going to move. As usual, I'll wait for the market to tell me :)