I believe on FA side, the stock market should not go down significantly. GDP tells us something but not everything. But at least US is growing at 0.9%, not in a recession anyway. My theory tells me the DOW should be staying above 13000 to price in the economy without recession. On the housing price, there is a recent hot topic in Asian magazines for wealthy people, both eastern and western Asian, regarding bottom fishing the US housing market. Although I am not really sure where will be the bottom of the housing price in US, I guess it won't be too far away, maybe around late this year if it comes earlier.
I am not able to cover the market everyday in next 2 months until August or even later, as I need to settle down my personal stuff. I think I will update when I can, maybe twice a week or a bit more. I think in general, a steady long position for long term buy and hold is highly recommended. I still expect you can earn more with good picks in your long term positions compare to bonds or savings.
Thursday, May 29, 2008
Wednesday, May 28, 2008
May-28 Back for a moment
Just got off the plane and had the dinner home, however, I will travel again with limited internet until 7th June.
Let me first breifly recap the market of previous 6 tradings days I missed. Apparently that was a major correction after break the resistent around 12950 area. My stop loss call on 12950 may shed your loss a little bit. Given most tech and commodity stocks have been flying for a while, this round of correction was not sudden, plus the continued weakness from finance sector. High oil price is an execuse for correction, as always.
For the next weeks, I believe the market will again turn to finance. Dow components AIG and BAC have been dumped greatly and I guess there would be two possibilities in the near future. One will be a decent sell-off comes and leads DOW to 12000. This is very bad situation as most people, either on main street or wall street, don't want to see this. Another possibility would be the rebounce of financial stocks bring DOW back to 13000 area to test previous high and continue a bullish trend. Of course people would like more to see this but we still need to inspect several days.
Trading strategy would be quite conservative. A combination of tech and commodity with your half position in long is OK for now. Be careful if you have short position on financial stocks. Retailers have touched the bottom as I expected months ago. I assume your hedging position on gold longs are quite profitable now.
Let me first breifly recap the market of previous 6 tradings days I missed. Apparently that was a major correction after break the resistent around 12950 area. My stop loss call on 12950 may shed your loss a little bit. Given most tech and commodity stocks have been flying for a while, this round of correction was not sudden, plus the continued weakness from finance sector. High oil price is an execuse for correction, as always.
For the next weeks, I believe the market will again turn to finance. Dow components AIG and BAC have been dumped greatly and I guess there would be two possibilities in the near future. One will be a decent sell-off comes and leads DOW to 12000. This is very bad situation as most people, either on main street or wall street, don't want to see this. Another possibility would be the rebounce of financial stocks bring DOW back to 13000 area to test previous high and continue a bullish trend. Of course people would like more to see this but we still need to inspect several days.
Trading strategy would be quite conservative. A combination of tech and commodity with your half position in long is OK for now. Be careful if you have short position on financial stocks. Retailers have touched the bottom as I expected months ago. I assume your hedging position on gold longs are quite profitable now.
Monday, May 19, 2008
May-19 Time for Greater China Area
With CEO and YZC are not walking to their all time high, Hong Kong index continue to be slightly more outperformed than US market. In the same time, Taiwan index soared more than 1% today to welcome new area leader who will take over Taiwan for next couple of years. Given the polican instability of Taiwan, the Taiwanese stocks are usually low on PE, I believe this will change in next couple of years. Taiwan may establish more than 6% anualized GDP growth again in the near future and most people are optimitics on the future. I have already recommend SPIL, and you can always think about EWT and TSM as Taiwan plays.
A share is in the consolidation mode and I think following the politics is quite essential to play A share stocks. Buy steels, basic materials, banks and brokers but stay away from real estates.
From tomorrow to 28th, I am not be able to update my comments. Maybe there will be 1-2 comments once I have internet, but I am skeptical about my correctness if I cannot track the market in real time. From 30th May - 7th June I'll be traveling a lot again. Fortunately, I don't see much risk out there if you follow my picks and suggestions. Good luck!
A share is in the consolidation mode and I think following the politics is quite essential to play A share stocks. Buy steels, basic materials, banks and brokers but stay away from real estates.
From tomorrow to 28th, I am not be able to update my comments. Maybe there will be 1-2 comments once I have internet, but I am skeptical about my correctness if I cannot track the market in real time. From 30th May - 7th June I'll be traveling a lot again. Fortunately, I don't see much risk out there if you follow my picks and suggestions. Good luck!
Sunday, May 18, 2008
May-18 Tips on Commodity
As I have indicated to watch commodity sector for a while and now I come back on this sector as gold have found its double bottom, as well as my prediction on M head of crude oil failed. To diversify my pick list, you may find ABX AUY and NXG are always on my pick list, for this wave of Gold, I see the possibility to test previous high above 1000 if gold successfully holds above 890. If you have entered on my previous short notice around 850 and 860, then please hold tight, if you haven't steppted into Gold stocks, consider to buy around 900 with stop loss 890. You can either buy stocks or gold ETF, but please use gold price as stop loss but not the stock/ETF price.
Other precious metals should also be your target. Miners will continue to be strong but most good miners are in their all time high therefore buy on next pull back will be reasonable. For exaple, next good entry price for RIO would be around 36-38. If you have noticed, I was among the very few ones that recommend miners on BBS in the previous several months. I am 100% sure that everyone followed my suggestion on buying and holding RIO (also MTL, FCX and PCU) is quite profitable.
Other precious metals should also be your target. Miners will continue to be strong but most good miners are in their all time high therefore buy on next pull back will be reasonable. For exaple, next good entry price for RIO would be around 36-38. If you have noticed, I was among the very few ones that recommend miners on BBS in the previous several months. I am 100% sure that everyone followed my suggestion on buying and holding RIO (also MTL, FCX and PCU) is quite profitable.
Saturday, May 17, 2008
May-17 Preview of next weeks with new picks [VIP] and [SPIL]
I'll be away from 20-28th to Greece therefore I would like to draw your attention in following sectors.
Another Russian play I would add to my pick list is VIP. This guy has been underperformed for a while as it spiked a lot during 2007. I think there is nothing changed for its FA given Russian has just begun to explode. To me VIP has already touched the bottom and unlike its peers such as MTL and WBD on my list with great success in past month, it has good potential to rise to new high.
I mentioned TSM and EWT weeks before but didn't put my pick list, but anyway it's still not too late to add SPIL to my pick list. I believe there will be another huge wave for Taiwanese stocks given the speculation on establishment of sweeter policies with mainland. SPIL is a good company anyway, as in these tough times for semiconductor industry, it does not directly design products but provides testing and packaging service for them, which is always required in the semi-industry. Besides, semiconductors has already bottomed out, therefore I am quite optimistic on its future performance.
- Asian sector, including Korean, Hong Kong and Shanghai
- Retailers, I believe the worst time for retailers has been past
Another Russian play I would add to my pick list is VIP. This guy has been underperformed for a while as it spiked a lot during 2007. I think there is nothing changed for its FA given Russian has just begun to explode. To me VIP has already touched the bottom and unlike its peers such as MTL and WBD on my list with great success in past month, it has good potential to rise to new high.
I mentioned TSM and EWT weeks before but didn't put my pick list, but anyway it's still not too late to add SPIL to my pick list. I believe there will be another huge wave for Taiwanese stocks given the speculation on establishment of sweeter policies with mainland. SPIL is a good company anyway, as in these tough times for semiconductor industry, it does not directly design products but provides testing and packaging service for them, which is always required in the semi-industry. Besides, semiconductors has already bottomed out, therefore I am quite optimistic on its future performance.
Friday, May 16, 2008
May-16 Off topic: How to read the rating from institutes
We have been seeing a lot those upgrades and downgrades from institutes and many people are somehow lost as statistics indicate that 70% of the price projection from these analyzing report never meet. Today as there is nothing important to comment on the market (data and trend is still bullish, given the shake the day before yesterday's Nasdaq and the spike yesterday to establish a bullish pattern), I briefly talk about my impression on analyzing reports from different institutes:
- Reliable in long term scope: Merill Lynch, Bank of America, Deutsche Bank, S&P, Morgan Stanley
- Publish report for their own purpose (pump, dump or accumulation): Goldman Sachs, Credit Suisse, UBS, Citi, Lehman Brother
- Totally unreliable: Piper Jaffray, Bear Sterns
Thursday, May 15, 2008
May-15 Recent strategy
First of all, many new people coming to this group and welcome! Glad to see people are mostly recommended by friends who are old registers in this mailing list. This implies many people think my emails are useful.
Today a friend discuss with me regarding the scope of trading. Basically, the trade-off between long term capital return, or short term swing profits. For most people, I recommend the long term scope as you may not have time to stick on the market and can not find a good entry or exit price for a certain stock. In many case, people find they can make more money if they can hold long, I believe many people here have similar experience.
Regarding the relationship between the broad market and stock on your hand, I think it is always more important to pick right sectors and stocks than predict the market direction. This has been proved to be true in the past several months when I recommend fertilizers, gold and other commodity stocks. Also, you may also find how fabulous it was to buy CF at 70 and hold until now.
What I want to say is quite simple, for my picks, I think for most people, buy and hold is a good strategy in the current market, if there is a correction but not a reversal to another new low, I would rather recommend to accumulate during the lows. Such as 12700 I said for previous correction.
Anyway, CHU CN and ZNH is still at good price to me, as well as many India stocks, Korean stocks, such as PKX and LPL are both in good shape. I like Asian plays better than anywhere else for recent market.
Today a friend discuss with me regarding the scope of trading. Basically, the trade-off between long term capital return, or short term swing profits. For most people, I recommend the long term scope as you may not have time to stick on the market and can not find a good entry or exit price for a certain stock. In many case, people find they can make more money if they can hold long, I believe many people here have similar experience.
Regarding the relationship between the broad market and stock on your hand, I think it is always more important to pick right sectors and stocks than predict the market direction. This has been proved to be true in the past several months when I recommend fertilizers, gold and other commodity stocks. Also, you may also find how fabulous it was to buy CF at 70 and hold until now.
What I want to say is quite simple, for my picks, I think for most people, buy and hold is a good strategy in the current market, if there is a correction but not a reversal to another new low, I would rather recommend to accumulate during the lows. Such as 12700 I said for previous correction.
Anyway, CHU CN and ZNH is still at good price to me, as well as many India stocks, Korean stocks, such as PKX and LPL are both in good shape. I like Asian plays better than anywhere else for recent market.
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