Sunday 24 June 2012

Can you BUY and HOLD stocks now?

Dear Friends,

My opinion is if you have the capability to hold stock, you may consider buying now. The worst it can get is that July may still fall if the ISM and Non farm payroll reports are bad. Even if it is bad, most likely, August will be the recovering month.

With the US election happening in November, I just can't see the market falling 3 months before. US President Obama will likely "kill" FED chairman Ben Bernanke if that happen. And with August being the FOMC month, my guess is that some sort of stimulus will be injected to revive the confidence if July is bad.

You might not want to wait till August as the stock price run-up might be earlier than expected. As it is tough to predict the bottom, my suggestion is that you can accumulate your stocks and wait for the final burst up till November. You need not pick the bottom. Do not be scared by any panics from now on.

Treat EVERY single panic as opportunity to pick up some valuable growth stocks from now on!

Anyway Dow Jones has dropped from the recent high of 13,338 points on 1 May 2012 to the recent low of 12,035 points on the 4 June 2012. We think there is a likelihood that 12,035 may be the lowest we see for this second half of the year. The worst would be that July's employment reports bring it to the 12,000 level again.

By the way, Asian Leading Investment Guru Mr Hu Li Yang's 10-15% retracement theory indicates that in a Bull market, a stable index like Dow Jones will likely have a retracement of 10-15%. Once it retraces 10-15%, that is the opportunity to buy.

13,338X 0.9 = 12,004 (calculation for a 10% retracement off the highest point)

This time round Dow Jones did not retrace 15% like what it did last October in the Europe uncertainty. But this round it did retrace 10% and bounce up after that.

Our forecast of the market this 2nd half of the year remains bullish and we hope that you will not miss this tremendous opportunity to enjoy a possible run-up before US elections.

If Dow Jones 13,338 is once again reached and broken, the all time high of 14,198 won't be far in sight.


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