Monday, 2 September 2013

Gameplan for next week: Crunch time on Friday - All eyes focus on JOBS in US!

Dear Friends,

2 weeks ago, we talked about this stock Cordlife in our article dated 19th August <Gameplan for the week> when it was $1.07.

http://www.danielloh.com/2013/08/game-plan-for-next-week-focus-on-first.html

Congrats if you followed our call on it! Now it is $1.325 and we think this is a good long term play. Not asking you to enter now, but I think it should be inside your watchlist this quarter.

This week it is crunch time in the battlefield with a tremendous array of reports that can change the direction of the market.

We have to remind all to pay close attention on the Friday's Non farm payroll figure. We think that this day may be a game changer. It is the determinant to whether the tapering might start and to what extent.

Any disappointing report this week will be good  for the market. Wallstreet is hoping for a bad non-farm payroll or unemployment rate so that the tapering will be soft. In fact the sentiment in Wallstreet is that they anticipate tapering will be announced in the next FOMC happening on the 18th of September. However they are hoping that the poor jobs results will cause FED to soften the extent of the tapering.

Below are some of my views of the market and predictions:

1) Jobs reports and QE tapering

After doing some research on the jobs results, we predict that the jobs results coming out on Friday might be a better than the forecast. Hence we think there is a high chance that the FED will announce the tapering on the 18th of September. We would look forward to Wednesday's ADP employment report and Thursday's jobless claims to add to our conviction that Friday's numbers are good.

It is the extent of tapering that is important here. Like what we have discussed in the past, we think that the FED will be careful about the extent this time round. We expect the FED to have a moderate cut rather than a severe cut to the QE package.

And this will meant good for the market after a consolidation recently. Given the significance of this Friday, we encourage all traders to watch closely not on the jobs numbers, but on the reaction of the market direction on Friday. The market will tell you how it interprets. Do remember that in investment, it is the perception and sentiment of the market that is more important, rather than the news and figures. If the market thinks it is bullish, we expect this run up to continue towards FOMC meeting on the 18th September. If it is bearish, we expect the downward momentum to spiral down till 18th also.

In short, take note of Friday's market reaction.

2) Syria crisis

A lot of friends ask on my opinion on Syria. My reaction is that Syria is too small an issue that we think it does not matter. Do you think if there is a strike now, would it create a panic in the market? Our answer is no. A few days ago, it might be a concern as the news is sudden. However with the internet news that we have now, it spreads so fast that the whole world knows about it within minutes. We consider the impact of Syria to be over. This war should be quick and fast. President Obama told us that there would not be ground troops involved, only missile strikes. It will be over in a matter of hours, at most.

So what is the concern and impact on the stock market? To us it is insignificant. This is different from declaring war on Iraq where there is a strong and powerful army regime.

And as a matter of fact, even if there is a strike, we do feel that Crude Oil price will not spike up above $115. The last high oil went to was $112 and we feel this might be the highest oil should go to even if there is a military strike. Now Crude is at $107.76.


3) STI and KLCI direction

We do feel that STI and KLCI may have hit a recent bottom at 2990 and 1660 respectively. Like what we have mentioned in past articles, we consider STI below 3000 and KLCI below 1700 as a gift from the market to buy into stocks. This is what we think as cheap.

I know people are concerned about Syria, QE, jobs and the recent Asian currency crunch. We think these are great problems that brought STI and KLCI down. However do note that we are still in a bullish market. We should look at any terrific opportunities to buy stocks whenever there is a selldown! Do not avoid the market like a plague now! You should adore it. It is cheap!

Do remember that we should be greedy when others are fearful. STI at 3000 and KLCI at 1700 is simply delicious! Even Jakarta composite at 4000 is unimaginably cheap to me! 4000 we think is a bottom! Anything below those mentioned, we are looking at accumulating.

To sum it up, we think you should be looking to buy some stocks now than to switch off your computer screen. It is better to buy Singapore stocks at 3000 than 3460 a few months back! Same with malaysian stocks.

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<<Has DOW and STI reached a bottom?>> 
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By Daniel Loh


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2) Market Outlook for the Singapore and US markets
3) Strategies you can used to hedge your risk playing with stocks
4) How can you make money when the market is falling?

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