If you are worried whether the stock market is going down after the super rally last week, our advise is you probably do not have to worry. For the mid term, 1-2 months, we still expect the bullish momentum to continue. Afterall our market sentiment indicator still shows bullishness in th estock market.
But having said that, I would probably like to see a bit of pause in the stock market. A few down days would be nice for this bullishness to continue. In fact, the faster the stock market runs, the faster it ends. What I would to see in the market is a bit of worry and anxiety coming back. That would make the stock market go further.
Remember that "A Market without worry is a worry for the Bulls". The market badly needs a pause. And yesterday Monday, Dow Jones indeed goes down 40 points. Now STI is also down 7 points. Quite good, not a bad drop. My alarm will sound if Dow drops by a triple digit figure, more than 100 points.
Now that the QE3 expectation has gone, I encourage all to go back to basics. And basic means looking at economical reports. For the past few months, bad results mean good as we expect QE3 to arrive. Now probably no longer so. If next month's job reports continue to be bad, expect the backlash. Btw, I expect november and december jobs number to be good because of holiday season.
Next month 11 October marks the start of the earnings season for American stocks. Do take note that our focus will shift to how the individual stocks are performing.
I would like to end by mentioning what Mr Hu Li Yang has mentioned in the sharesinvestment conference held over the weekend. He said that "Now we have entered into the 2nd half of the bull run, we really need to spend time picking the right stocks." Treat this earnings season a way to get rid of the bad performing stocks in your portfolio.