Tuesday, October 13, 2009

US market: going up on low volume

Not sure. My view:
  • This rally is driven by liquidity, not fundamentals. Unlike '98, Asia cannot export its way out. Expect years for the world economy to rebalance. Governments in every country, from the US to China to Australia to Singapore have given some sort of 'stimulus package'. One day the morphine will wear off.
  • My gut feel is that the rally still has some way to go. I dont feel the optimisim for the end of a bull. Still, I could be wrong - this sentinment is not a measurable indicator. I await further signs eg: penny stocks (sub 5c) on SGX hitting top 20 vol, more bullish news reports, less doubt, more participation by the masses.

US market has been making new highs in low vol since August:

Graph from Bespoke Investment group showing breadth has improved since August (possibly since July).

Uncertain. Market may still be in trading range - so I'll buy on dips, cut loss when going up. The S&P chart above shows the mini-rallies from July to now lasted 8-13 days. Tomorrow will be day 7 of the current 'mini rally'. The SGX has now gone back to faithfully following the previous night's US moves (where it used to preceed them).

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