Chopping Board for Stubborn Punters and Gamblers

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May 14 2009
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Speculators and punters are at the crossroads now. Stock market has arrived at the traffic light – would it pause before continue its journey to the north or would it make a U-turn and go south? It’s freaking fun to see the look on the face of the speculators or punters now. If the so-called bear-rally has exhausted its fuel then it’s no brainer that you should start selling, prepare the cash and wait for the next low for entry. If the so-claimed bull was just teasing you by this temporarily pause before charging again, then you should buy more. So which is which? Nobody knows if the Dow Jones’ 2-month “rally” was the start of a genuine bull-run or merely a bear rally hence the sucker’s rally. We only know the 2-month “rally” has spiked about 30% from its’ low and such rally within a short-period of time is not healthy, not to mention dangerous.

But nobody cares because the crowds on the trading floor were shouting “Bull is running” and “Buy before you miss the boat”. It was enough to brainwash you to jump onto the bandwagon come rain or shine. Furthermore how could you be wrong when the daily transaction volume suddenly jumped to over 3 billion shares (KLSE)? You sweared on your grandma’s grave that you can see the bull showed you two thumbs up on the trading floor. You rubbished that the market-makers linked to the government were behind the manipulation to artificially create the feel-good atmosphere. Where did the money come from if it was true that the foreign investors did not come in, you argued? Many have forgotten that the so-called “hot money” came from the stimulus packages announced by almost all countries affected by the global economy crisis.

KLSE-1Year-ChaWithout heavy selling by the foreign investors due to the fact that they did not hold huge local portfolio in the first place (as compared to 1997-1998 Asia Economic Crisis) the job of pushing up or down the composite index was extremely easy. In fact the local market-makers can artificially push up the index by 1-point everyday and you need less than 100-points to create 100-days of bull. Furthermore what the punters and gamblers would like to see is only positive closing. Just like honey the rest of the suckers would be flocking to the stock galleries and the market-makers can slowly by surely inload their holdings.

DJIA-1Year-ChaAt the moment situation is quite tense at Dow Jones because the 8,000-level is being tested again. With yesterday’s closing at 8,284.89 after plunged 184.22 points or 2.2%, you’ve little buffer to play around and should the 8,000 level breached the next selling wave could be on the horizon. U.S. retail sales fell in April for second consecutive months, down 0.4%, worst than economists’ expectation. This is not surprising at all considering people are still licking their wounds from unemployment yet still have to pay their mortgages and credit cards debts. Do I have to remind you that the 8.9% jobless rate is still at 25-year high although some smart-suckers said it’s very far from 1929 Great Depression?

DJIA-KLSE-1Year-CompareSo, just because we may not hit the 1929’s Great Depression jobless rate, we’re on our way to recovery? Sometimes it’s amazing how these analysts got their job in the first place. One little thing I learn from investing stocks is not to count the chickens before they hatch, not to mention now you’ve actually many sick chickens that may not be able to mate and produce the eggs. As a matter of fact, KLSE has recover much faster compared to Dow Jones but when the Dow plunged to its’ lowest in Mar, KLSE didn’t follow through. Hence you can say that if the worst is not over for Dow Jones, KLSE has definitely not seen its worst yet.

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U are right. we have not seen the worst yet! Following extracted from my latest article:

Why the comeback? This round of bull market (or bear market rally) is possibly caused by the injection of money into the stock market by institutional investors especially PNB and Khazanah. Remember the issuance of a total of 5.33 billion new units of ASM and ASW 2020 recently?? And the stimulus package of RM 10 billion to Khazanah for equity investment in 2009-2010??

what say u?

line clear. mkt moving upward. 25/5. mkt operators bet vs majority. who u think will win?when majority chase they lose. when majority act smart they lose too. the winners are mkt operators & fundamental analysts.I try not to suggest just for the sake of suggesting. I refer to reports and data published by countries in east asia and the US. Note refer to the US housing start data for the last 10yrs. what do u see?

[…] Chopping Board for Stubborn Punters and Gamblers […]

[…] Chopping Board for Stubborn Punters and Gamblers […]

[…] Chopping Board for Stubborn Punters and Gamblers […]

[…] Chopping Board for Stubborn Punters and Gamblers […]

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