Thursday, 15 November 2012

Speech of President Obama is a disappointment

Dear Friends,

I went to sleep after the speech started. When I woke up today, Dow fell another 100 points. Again his speech prove to be a disappointment in the market. Probably the market expects more. As I have said, it is probably too early to expect consensus so soon. Discussions have barely started, so I do not think that any speech these few days will come to anything.

Expect more volatility in the market. Every noise heard is a trigger to sell. 

It is reported on a website: 

"The selling accelerated after President Barack Obama again stressed his commitment to ending Bush-era tax cuts for the wealthiest Americans during a press conference. The president's firm stance sets the stage for a tough battle with Republicans toward compromise on the next federal budget.
The release of the minutes of latest Federal Reserve policy meeting was a factor as well as the commentary showed some division among members of the central bank's open market committee about continued quantitative easing efforts in 2013."

You can see that now confidence isn't in the market at all. Generally it is easier for market to drop 100 points rather than increase 100 points. It is easier for market to sell down to the close instead of closing strongly. It is easier for the market to sell on bad news rather than buy up on good news. (A good example is yesterday good CISCO report: The market is not listening to the good news much, but focusing on the disppointment).

All these are indications that market confidence isn't there. Let the market falls, and we hope it does. Our first target of a DOW Jones bottom would be 12300, a 10% drop, based on our mentor, Mr Hu Li Yang's theory. Once it reach there (we aren't far now), it may be a good chance to test the water by picking up some stocks. That may be a good point of reference for a bottom. A 15% drop from the high will indicate the BEST buying opportunity.

For now, do your homework and identify those stocks that have done well in their earnings report announcement. Identify but not enter yet, as the market is still going down...



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