Friday 11 January 2013

S&P500 at 5 year high, what does it mean?

Dear Friends,

S&P500 continues its surge forward with a triple top at $1470. Yesterday high is $1472. I would believe that S&P500 would not have difficulty crossing this barrier as the earnings season gets started. Dow goes up another 80 points on Thursday.

It is reported in marketwatch that data from China bolstered the view of an improving global economy.

“Chinese growth is accelerating and the market over the last day or so seems to have taken on a more positive tone as it relates to earnings,” said Mark Luschini, chief market strategist at Janney Montgomery Scott. 

December exports data from China beat expectations, while European Central Bank President Mario Draghi projected that the euro zone’s economy would bounce back later this year. 

That is what we believe too, there should be a recovery in China and Europe. US economy will be gradually producing results soon. With the fiscal cliff incident and uncertainty behind us, US companies might start to allocate the budget to rehire people. We expect the unemployment rate to drop in 2013. And that is the reason why FED is discussing about abandoning the QE3 policy by year end.

However having said that, we believe that US or Singapore Stock market will never go in a straight line. There will be ups and downs throughout the year. From our research, we project that US stock market might reach a peak in February or March. The momentum of S&P500 will start to slow down after this earnings season. 

Bear in mind we have a debt ceiling dateline coming in March. It is just nice in February we bring this topic up again. Expect volatility. A good trader is one who reads the market cycle well, and has a way to gauge the market sentiment. We always believe that an established trading system should encompass a good market timing and a good sector analysis, not only on stocks selection.

In the meanwhile, happy trading ahead as the US market is still in acceleration mode. Just take note of February and look at our website to know of any change in the market sentiment. And bear in mind that US market will definitely affect Singapore market.

Daniel Loh

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