Bulls vs the Bears

So its the Bulls vs the Bears again. For the bullish, these guys are buying commodities , gold, and oil related stocks. For the Bears, well, I think they are just sitting there and saying to themselves that 'We will watch and see how it reacts after all, the markets always come back within 2 weeks or so".

I will not be catching falling knives too soon as yet and it does not make sense to be holding a position over the weekend.

Chinese stocks are the most pricey currently trading in the above 40 PEs, with HK China shares following and one can expect further 'weakness' there with some selling expected on that area although, the wealth and liquidity of chinese funds cannot be discounted.

Are investors in self-denial of the fundamentals. Just think , higher oil prices = more pricey products. Cost of living has to go up as its now more expensive to transport supplies and goods now. Subprime problems in US mean loss of jobs and borrowers may have to find ways to pay off their housing loans, which means that they will have to cut their other expenditures and the continued announcement of job losses at banks on the mortgage departments will mean that there is a bunch of people out there looking for jobs. Its a definite slowdown expected next year .
Personally, I like a newsclip article on Wednesday with Gisele Bundchen saying that she will accept all currencies except the USD as payment for modelling jobs. It just says it but somehow, US /Fed in a Hobson's choice of just keeps cutting rates which means US$ will continue to remain weak

The bad news:
Oil recouped early losses to resume its march towards the US$100
The strengthening of the Yen again, may see some unwinding of carry trades, also perceived bad for Japanese stocks as it makes exports more expensive
Jitters have grown since Citigroup Inc said on Sunday that it needed to take an additional US$8 billion to US$11 billion in writedowns. Note that ML had just earlier reported a US$8.4billion loss writedown for 3Q07
General Motors Corp on an accounting adjustment, had a a record loss

A$ is in the spotline today

A$ again in the spotlight as RBA lift rates an additional 25bps (as expected) to 6.75% followed with hawkish commentary. The markets are not ruling out a further hike in December. A$ has firmed up some 100 bps today on back of the rate hike.

Weak USD, Strong Gold Price which is getting closer to US$900, Oil hits new high and local oil pumps here has raised their cost of petrol to the consumer yesterday. Markets around still continue to have a live of its own despite all the signs of cautiousness. Track the volatility of the Hang Seng Index and the high turnover of the futures and covered warrants today.

For the stocks, the play continues on commodities and agricultural products with some broker upgrades on them. In Singapore, Wilmar, Golden Agri and Indofood are the few that comes into mind. In Malaysia, stick to plantation stocks, IOI Corp and KLK are the 2 faves that come into mind.

Just keep in mind the MSCI changes if you are looking for trading ideas too.

Where Does The Markets Go From Here?

Good question. .... there continues to be a sense of cautiousness in the market and there has been a wide divergence between institutional stocks vs those from the retail. Funds continue to just focus on a bunch of blue chips and ignoring most other stocks and one can see that the penny and non-fave stocks continue to go on a downchannel.
Currently, the easiest way for intra-day traders to play this game is to play the momentum game and focus on stocks which are news-related or else buying stocks with good fundamentals and where they are widely followed by institutions.

2 things stand out today, Wilmar , a timely call which had a nice run on back of call by CLSA, as MSCI changes were announced. The main theme has been resource play( commodities and metals)
1)CLSA initiated Wilmar with an Outperform although, they have been pretty positive on the call. Target Price (WIL SP - S$4.08)
NB: Newly merged agri-business giant Wilmar is the sixth largest company listed on the Singapore Exchange

2) MSCI has announced changes to it indices this morning confirming a number of the changes as it moves from its Standard indices to Global investable indices. Just on Sing alone.. email me if u do want HK.

What is in:
*** SINGAPORE ***
New additions announced today (not previously known to the market):
Yanlord Land
Genting International

Addition names previously announced but confirmed for entry:
Wilmar International

New deletions announced today (not previously known to the market):
CHARTERED SEMICONDUCTOR
SUNTEC REAL ESTATE INV

Deletion names previously announced but confirmed :
HAW PAR CORP
SMRT CORP
SINGAPORE PETROLEUM CO
WING TAI HOLDINGS
SINGAPORE POST


This is the first of a 2-step move from the Standard indices to the Enhancedindices, which is based on a new methodology for selecting constituents. Thefirst stage wil be implemented on Nov 30 and the second stage will beimplemented at the end of May. As such additions will be added at 50% of theirexpected final weight and moved up to full weight by the end of May 2008 anddeletions will be fully removed from the index on that date also. So one can expect institutional funds to make changes and program teams are going to be busy while the hedgies may just decide to buy/sell ahead. Take your pick.