Nasdaq is too high
and reaching its 15 years resistance! Be careful of tech.
1)
Yesterday Dow dropped 292 points. S&P500
also dropped 31 points. The reason of the drop was because of Durable Goods
Report. The forecast was 0.3%. However the actual result was 1.4%. Durable
Goods measures the orders of goods for production. It is normally treated as a
precursor indicator of the enterprises forecast for the next 3 months. There
was profit taking after the report came out.
2)
Temporarily we think that US Fed would probably
not increase increase rate, at least until September.
3)
Although recent interest rates increase fear has
subsided, we think that there is a likelihood of a correction coming in april
or may. Short term traders should be cautious. The old cliché, “Sell in May and
Go Away” might come again this year.
4)
3 Reasons why?
a)
Nasdaq is reaching its 15 years all time high
resistance, 5132. A few days back, Nasdaq reached 5042. Yesterday it dropped
118. My opinion is that breaking this 15 years resistance is never easy. The
more it moves closer, the more careful we should be. Recently Tech stocks have
gone up too much and is due for a correction. If Nasdaq drops, the whole US
market will do.
b)
US will start to declare their first quarter
earnings starting from 8th april. It was forecasted that this first
quarter earnings might drop 8% compared to the fourth. This drop is the largest
since 2009. As Christmas rally is over, and expectations still high because of
the high prices of stocks, there is a good chance of profit taking should any
stocks miss. This is also the reason why “Sell in May and go Away” always come
after the 1st quarter results.
c)
Apple the largest company in US will start to sell
its first i-watch on 24th April. I believe that expectations of I watch
sales has been too high, causing this stock to increase 25% in a short span of
2 months. I believe that there might be a chance of profit taking on the launch
day. A case of Buy on rumours, Sell on news. If Apple drops, so will Nasdaq,
S&P 500 and Dow as this company is in all 3 indices.
5)
We believe that US, Germany, China, Japan and
Singapore indices are already at a high. We encourage short term traders to
start to profit take. Do not look at stocks anymore. Wait for a big drop to
come and look again in May or June. You may buy at a cheaper price. Please be
patient!
Shanghai 3800 is a deadly cliff!
1)
Last year we told all not to invest in china
stocks after June or when it reached 3800. We expect a big correction coming. 2
days ago, Shanghai comp reached 3716. It is 84 points away from our 3800
resistance.
2)
Our advice is please don’t touch China market
again because the risk is very high now.
3)
If it goes above 3800, the more it goes up, the
more it will fall.
4)
Once it touches 3800, the index might go into
one year of consolidation.
5)
In the consolidation phase, it is better to
focus more on defensive sectors like Healthcare, Telecommunications, Utilities.
Please don’t play banks or tech, any sectors that are aggressive.
Singapore is still high at 3420
1)
STI is now 3420. A few days back it was 3360. The
reason why STI has run up is because interest rates fear has subsided recently.
2)
However we think that STI is no longer cheap.
3)
With DOW at 18000, Nasdaq at 5000, Shanghai
composite at 3700, Dax at 12000, Nikkei at 19700, we don’t it is cheap anymore.
The 4 major economies’ indices are all at the peak.
4)
If all consolidate together, I am sure STI will
fall too.
5)
We urge patience for these couple of months and
wait for a retracement.
Nikkei 20000 is a hugh psychogical barrier
1)
Last year in the programme, we did predict that
Nikkei would run to 20000.
2)
At that time, it was 17000. Now we are 19700,
just 300 points off.
3)
20000 is a hugh barrier, a mountain to climb.
4)
I don’t think it would break that fast.
5)
Nikkei has run 3000 in just 3 months.
6)
Please profit take now. Take a look again only
after it drops.
