Bewilderment

Arranging my thoughts.

The market is confused, so am I.

I’m seeing a bullish flag pattern forming for DJI, S&P500 and NASDAQ. But indicators are pointing to a downtrend. Data released past 2 sessions were bad, or should I say not too bad, but not to expectations.

I’m seeing Hang Seng closing below its 50 days MA. Indicators pointing to a downtrend. Last 5 IPOs plunged at least 10% on their 1st trading day. Confidence lost.

Last but not least, I’m seeing STI closing below 50 days MA. Wave 5 seems to have failed. And since wave 5 has failed, this will be our 1st wave of BIG wave C downtrend. Very likely to go to a low of March 09, and no surprises if it goes even lower.

Technically, it seems like the rally is over and a correction based on wave count could bring STI to a low of march 09 or even lower.

Fear has been created. Views has been changed.

But it is not wrong to flip views quick, as the market is DYNAMIC. It has been buying on dips strategy the past 6 months. Time for a change to sell into rally for the next 6-9 months?

Definitely my bullish feeling has start to slide, but I am still not bearish due to some of the following reasons:

On a macro level, things are getting better. Banks have recapitalised and stand at a better position for any setbacks. Many companies are receiving orders again, and many companies are starting to report better q-o-q earnings. The effects of stimulus packages and fiscal policies implemented by governments all around the world are starting to kick in. But one bad effect from the stimulus package and fiscal policies, especially for US markets, is they are acting like a kid, where one has to keep feeding them with lollipop (stimulus & fiscal policies), and if you stop giving them after it has finished (deciding, OR EVEN SHOWING SIGNS to raise back interest rates etc), they start to cry.

I am pretty sure with the huge amount of USD being printed, it will weaken the value of the dollar, causing prices of oil and gold climbing and inflation will be back pretty soon. Furthermore, with such loose monetary policies and interest rate NEAR ZERO, it makes no sense for money to be kept in the bank. CASH IS NOT KING at the time being, as pretty soon I will not be able to buy the same 1$ soya bean milk at 1$ anymore. So I believe many, will start to look for tools which can hedge their money. So where what will they look for? Stocks and properties? Highly possible.

Market has definitely over-reacted the past week, calling for a big crash all over again. But stay calm and think, fundamentally, at current situation, things are on the recovery and not deteriorating like last year, so what crash are we shouting for? Unless a bigger crisis is looming without us knowing yet.

I would advocate investors at this point to concentrate on individual companies instead of the market index as this is the month of corporate earnings. Lets look forward and see what surprises will it bring us.