Wednesday 11 April 2012

It is a Hideous Day in WallStreet, Time to be careful in April while Focus change to Earnings

Dear Friends,

Dow Jones is down by 183 points now in mid day trading session. Nasdaq is now below 3000 points. Almost all sectors are in the Red. The market is dragged down by Europe as FTSE100 ended the day down 128 points, a 2.24% drop. And of course, Europe opens today after a 4 day rest. It was affected by the terrible Non Farm Payroll result.

Like I mentioned, there are 2 kinds of fundamental economical reports that drives the market direction. One is enterprise report, the other is Public report. Non farm is a public report. April market direction won't be good. My advise would be to cut down on the position size even if you want to enter.

In fact last month, on 10 March, I mentioned that there might be consolidation early April:

This is my quote in the article:
"I expect this month, at some time the market will have a consolidation, may be in mid March, or beginning of April. Depending on any bad news that can create a small panic. But of course knowing the exact timing isn't easy. I always rely on my Market Sentiment Indicator of NYSE and S&P500 to tell me. Once it turns bearish, I would go bearish."

I know that RISK has been high after February, we just need a bad economical report to spark a consolidation. Well, this month Non farm payroll on Friday might be the spark.

My view is that this Month we need to be really careful. You may stay in the sideline if you can. Because, I think after today's fall, my Market Sentiment Indicator of NYSE might turn bearish. I need to check it at end of day though. If my NYSE market sentiment indicator goes bearish, I will start to look for bearish stocks. Time to MAKE BIG MONEY in shorting some stocks now! I would probably have a combination of Long and Short positions now!

Meaning for every stock that I long, I will have a short position to hedge.

However, as I also mentioned, this month is Earnings Season month. Likewise, Singapore companies are going to release their earnings this or next month. We will still have companies that beat earnings and gap up. So the impact of the broad market on individual stock might not be as bad.

Just that we need to be extra careful in our stock selection for this MONTH!

Best Regards

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