Thursday, 7 June 2012

Best Up Day in Dow Jones this year but should you jump in?

Dear Friends,

By Midday today, Dow Jones is up by 215 points now. The reason for this rise is because of anticipation of QE3 ahead of Ben Bernanke testimony tomorrow. All sectors seem to be up. Advance stocks beat declining stocks 76.5% to 15.3%. This is a huge rally. It is the best day for Dow this year. 

Yes a lot of us may jump into the stock market. I guess tomorrow STI will open at a high, with a lot of stocks in the green. Maybe a lot of Singaporeans will jump in 2moro.

However like I mentioned in the last article, I encourage you to exercise position sizing control. Make sure you put in only a small portion of your money if you would like to jump gun.

Today's rise is purely speculation. And I would say, unless Ben Bernanke gives any hints on potential QE3, we should still remain cautious. Sure, there may be some missed opportunities of buying stocks at the bottom if market rallys after 2moro Ben's talk. But being a trader, we need to think of the worst scenario.

If there aren't any assurances from Ben, the market might swing the opposite direction. The time is still early before we confirm whether the trend has changed.

In fact today at 7pm Eastern time, 7am 2moro Singapore time, one of Fed's influential member Yellen will deliver his speech also. All eyes will be focused on him before 2moro's Ben talk.

Let us wait and listen carefully.

Best Regards
Daniel

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