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...