Feeling stress from the market?

Well here is the solution …

Just squeeze the life out of Uncle Ben.

Hopefully he will provide some relief to the market.

Thus injecting more money into the MARKET …

The S&P500 has rise up 8 points off yesterday and sitting slightly above the important support line at 750. This is likely due to a technical bounce off since yesterday sell off. Will this spark a new buying interest for the investor ? 

I certainly do not think so… We have to see how it close today after the hearing of Mr Bernanke testimony. 

As i said before, we are at a major crossroad of the economy. Thus either direction will be a big setup. The stress test against the bank will be a big thing throughout the week. This will affect the market greatly. 

Nationalize or Not ? 

Nationalizing the bank will not solve the problem as taxpayer will be responsible for the bank. The best thing to do is not to do anything but the government has already putting 2 legs into the market, hence they can’t just allow it to die. I guess most likely they will keep pumping money into the distress bank like Citi and BAC. This will help to shovel up their capital and the confidence of the investor. 

Investment in this kind of environment is extremely risky yet the reward will be great once the waves has died down. 

Citigroup really never sleep. Day in Day out stealing the limelight. Please stay low, stay under the radar. Please do not get nationalize, well 40% own by government will be good enough and from there on please just stay away from the news.

Citi just need to work their butts off and get ride of the toxi “assert”. Sell it at a okay value for once. I dun care you drop to penny stock. I just need assurance. I will scope up all the value you have once you are declared.

Okay enough of rattle. Look like the market is going to test the low again as i type this post. The Dow Jones Industrial Average inching to the low of 7000 mark with S&P500 close to 750 mark and Nasdaq close to 1400. Once again we are at a critical junction.

Will we see a Technical Rebound or Dead Cat Bound?

A group of Chinese from China is heading down to the US on 24th of Feb go hunt for bargain houses at foreclosure prices. According to the chinese website, more than 500 people has sign up for the trip. Only roughly 50 affluent house hunters from all across the China are being selected for this coming trip.

The tour include de-stress houses from Boston, New York, San Francisco and Los Angeles . Their mission is to find investment property at the range of $300k to $800k apiece.

The tour is being organize by Soufun.com, China’s leading real estate website. This is the first overseas buying trip for the real estate firm whose name in Chinese means “search for houses”.

This buying spree might open up the interest from the Asia investor which will in turn create a reduction of the housing inventory in US and thus create demand in the future. If the government in US encourage more affluence buyer from the east, this will solve the housing problem at a faster rate.

The Chinese with loaded cash will be itchy for the piece of land or houses in the far west. This trip may not be the last and it may just be the beginning of a new influx of the east buyer in west.

This is definitely a good news to the housing industry in US.

For more information please check out the website www.soufun.com

We are at a crossroad and critical junction of the global economy. Gold has just top the 1000 level mark and sitting slightly below it. USD dollar has been rising due to the flight to safety behavior from the investor. Euro dollar has been slipping further down due the imminent default danger from the Eastern European Countries. The US major indexes are going to retest the November 08 low. The Japanese Market reach near to the low too. Oil seem to keep slipping down.

This is the deciding crossroad that will make or break the investor. People will want to rush into Gold now. But is it really wise to do so? I think the hype is too much and yet i guess gold investment still have a few legs up. Therefore i will be prudent to wait for it to stable at the 1000 level first before deciding to enter the market.

EUR/USD continue to hover between the level of 1.25 and 1.3 for the pass few weeks. The level of 1.25 has been tested recently. The EUR/USD will likely to continue range bound at a area of 1.25 to 1.3 as the world still not sure where to park their money.

On friday close, the US dollar index has fallen dramatically and this might be good to the market for the coming week. This is because base on the inverse relationship between the US dollar index and US Market at this period of time.

Keep an eye on global economy and be prudent on investing in either Gold, Oil, Dollars and US Market.

Happy New Year 2009.

2008 has been a bang and exciting year for the market. This year will likely to continue the trend. We will have another shock then will most likely have the stablization. 2008 has been a nice year for me as i learn a lot of insight experience from the market and my fellow traders.

Despite of the bad market. My stock still held strongly against the tide. No doubt some of my stock taken some beat here and there, there are not servere. I closed up 30% last year 2008. I started pumping in money since the last few months of last year to boost up my account. My forex account has been doing great again since the downfall of my unfortunate event or encounter with the last forex broker account. The currently using saxo account is doing great with great security features. My forex account has up almost 20% since i open it in last year October.

For those looking for an answer of how to trade in this kind of uncharted market, I do provide personal coaching. I also provide group coaching too. Till now I only provide for people with a little knowledge which mean they either attended Wealth Academy Investor or Wealth Academy Trader program. So do apporach me to book for your personal coaching.

My personal take for the year 2009 will be down for the 1stQ and 2ndQ. Then it will start to recover for the 3rd and 4th quarter. Several sectors looking good and healthy are commodity, Infrastructure, Health Care, Old school Finance insitution, Housing and Transportation.

Lookout for the January Effect as it work tremendously last year. This year will most likely follow the same pattern too. The January Effect basically is if the month of Jan the market ended up, the rest of the year the market will ended up too. This is even so if the first 5 days of the Jan is positive. There are several ways to protect the stock. Like buying a put options to protect the stock or just by selling call you might be able to collect some rental to par off the paper losses on the stock.

This year i will kick my butts and serve you guys better with good information and tips here and there. I will want to start making a point to post something useful for you guys daily and kick start this blog.

I want to thank all of you for reading and supporting my blog. I will continue to serve you guys with Good information and grow the account with me.

Dow Jones tested the low yet again at the level of 8100 before fire up to 8400.

DJ make the most gain among the 3 indexes. One thing to take note is that the trading volume is still pretty low. The consolation is that the support is holding very strong. If it break through 8500 tomorrow, then the bull will most likely have a short term run.

Nasdaq hit 1430 which was the low on 13/11/08 and shoot up to 1480.

Nasdaq make a double bottom in the perspective of 5 days chart. It just bounce off at 1430 level. If it break through 1500, then the bull will have a short term rally.

S&P500 also tested the low of 830 before rally up to 860.

S&P500 rally almost 30 points during the last hour of the trading period. As long as it do not break down 850 again, then most likely it will go back up to 950.

In conclusion, the market will most likely trading in a tight range. If the market not going up for the next few days then a downside might be a possible if it break through the low. So trade wisely and cautiously. Short term unsure… Long Term Positive…

The market has been churning people stomach up and down. The market is not falling off the cliff for the last 6 weeks. Take a look at the S&P500 chart. The S&P500 has been testing the low 850  for 6 times in the last 6 weeks (each candle represent 1 week). It has been holding very strong at 850 despite all the gloom and doom news.

So the million dollar question is will S&P 500 break through the low of 850 and jump down the cliff?

From the weekly chart, I seriously do not think that it will break through the low of 850. This is because of the following points …

- MACD Histogram bar is getting smaller as each week passes. This mean that the impact of the downside is not that huge.
- MACD Lines does not seem too good but it seem like the black line is going to cross the red line. This mean that a turning point might be coming.
- RSI Reversal is flat at the 25 mark now. This mean that there is a high chance that it will start to rise which indicate a bull is coming.
- If you take a good look at the chart, you might even notice that a continuous candlestick pattern might be forming.

That said from the above points, the market might still give us a huge surprise and tank us for a few more time.

In Conclusion …

I do not care about where the market will go in the short term. I also cant really predict where the market will go. So I do have a safety level for my short term trade but not my long term investment. If you have read my previous article about the future of the Dow, which i talk about the movement of the Dow that i think will range, you will have some idea where i think the S&P500 will go in the long term.

Treat your investment as a business but treat your trading as a casino or a probability game.

I have been looking at the history of wall street through reading books. I notice that most of the rich people made their money when the market is at extremely dire environment. This is where most of the average people are scare of investing in the market. As i ponder about why do the rich dare to buy in this kind of environment, one of the phrase suddenly pop out to me …

Buy Low Sell High

I always wonder where can we find cheap and good healthy stock? Well it is pretty obvious to me now. It is at this BEAR market where I can find cheap and healthy stock. Those company that are going to survived in this current situation will come out stronger than ever. They will be the major market leader in their own sector. I can really see the future of Citigroup, JPM and BAC. They will be the 3 strongest bank in US.

Why is it so difficult to buy low sell high ?

This is because people including myself is driven my emotion. Emotion will mask our sight. We will become myopia or short sighted. I have ask my student recently if they would buy into this market. All of them give me a no answer. I expect this answer too as most of them is being control by fear. Fear that the market will be gone and their hard earn money will go into the drain. Most of them already being affected by the downturn of the market as they have started to invest when the market was very bullish. The emotion of losing money is too great to handle and people tend to want to do something when things are not going the right ways. So many of them start to sell their stock even if the value is already down by half or more.

Then i ask them again if they would buy into this market if they have cash available to invest for 3 to 5 years and they did not get affected by the downturn of the market. Well majority of them say YES!!!

Gold is a safe haven now ?

Personally i do not think that Gold is a safe haven as they are already at such a high price. No doubts gold will be a safe haven for a few months but definitely not for a few years. This is because if you buy at a high price, then most likely you are going to sell low.

Conclusion

I feel that the stock market especially US MARKET is the best investment opportunity NOW. The reason is the stock market is at a super CHEAP SALES NOW. This crash does not come easily. As long as you have the capital to invest and do not need the money, then i will recommend you guys to invest in stock market. If picking individual stock is risky to you then just buy the index ETF or the sector ETF. Then the risk of individual company being bankrupt is greatly reduce.

Be prepare to see the potential growth in at least 5 years.

Good Lucks Guys and happy shopping

cheers,
lawrence

This is a warning to those people who are buying a call or a put in this all time high volatility environment. Most of the option especially put is price extremely high price. If you buy at such a high premium, most likely you will be selling at a low premium.

I have a student asking me … how come my put option is not making money even when the stock price falling off the cliff?? Well straight away i can only think of 2 possibilities which are TIME DECAY and IMPLIED VOLATILITY. The reason why my student is not making money is because he buy a front month contract and a put contract with high vega. So this mean that even if the stock price move toward his intended direction, he will not be making money as the time decay and implied volatility eat up all his profit.

Even gurus in CNBC say,”people who buy option is either an idiots or a fools without cover the long option”.

If you really want to buy options, please know the risk and do not be surprise if you are not making money …

Good Luck