Tuesday, 18 June 2013

Short term rebound indeed for STI as US market remains strong

Dear Friends,

I did said that I would look at STI between 3000 and 3100 points as I feel that this is a good place to buy some stocks cheap. Congrats to the courageous who went in to scoop up some stocks the day when STI reached our first support at 3100. But I must admit I am also surprised by this sudden rebound.

STI is at 3220 now.

Last article on my view to pick up stocks at 3100 when it was at 3300:
http://www.danielloh.com/2013/06/avoid-picking-local-stocks-if-sti-does.html

But why is this rebound occurring?

Everything boils down to our Big Brother, the US market. US has been relatively unhurt by the Asia market weakness. Big Ben again saves the collapse temporarily. US probably only suffers a small bruise. I have mentioned time and again that Big Ben is a good market psychologist and he is my number 1 American Idol.

Not only has he saved the US market from collapsing in the Lehman Brother collapse, he brought US market to all time highs even when the employment rate is still at a high. Clever manipulator of the market. That is y everybody is looking towards his American Idol appearance again on TV tomorrow.

Recently US market has an increase in the VIX, a measure of volatility by studying the S&P500 option prices. It is nicknamed the FEAR index, and it goes inverse with the market. It spiked up to $18 and drops back a bit. I am looking at it to see if there is a chance of breaking the consolidation pattern. It has been traveling in between $12 and $18.


Our suggestions and tips:

1) STI is poised for a short term rebound. Look and accumulate at those oversold STI component stocks.
2) When u buy, do not park all your money inside, accumulate the stocks up. Divide it into a few portions. Be prepared to buy again when your stocks fall by 25%. This will take into consideration when market turns down again.
3) Do not focus on those mid cap and penny stocks that did not drop much.
4) Focus your eyes on US market and the VIX to know the sentiment of the market. Any weakness can still bring Asia down. We would of course update.



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