Weekly Market Update – 16 January 2017

The market finished the week in unimpressive style given that it was the eve of a three-day weekend ahead of Martin Luther King Jr Day on Monday 16 January. The S&P 500 took a breather during the past week, logging a modest downtick of 0.1%, while the Nasdaq Composite added 1.0% thanks to relative strength in the technology sector.

The benchmark index spent the week inside a 25-point range as participants awaited the start of the fourth-quarter earnings season. On Friday, Bank of America (BAC), JPMorgan Chase(JPM), and Wells Fargo (WFC) got things going with a set of mixed results. Bank of America and JPMorgan Chase topped bottom-line expectations while Wells Fargo reported below-consensus results. The three names surged at the start of Friday’s session, but saw intraday profit taking. It is worth remembering that the financial sector enjoyed a huge post-election run, soaring more than 15.0% in just one month. During the past week, the sector shed 0.1%.

Investors received a small batch of economic reports last week with the most noteworthy pair crossing the wires on Friday. December PPI (+0.3%; consensus +0.3%) and core PPI (+0.2%; consensus +0.1%) were close to expectations while December Retail Sales (+0.6%; consensus +0.7%) and Retail Sales ex-auto (+0.2%; Briefing.com consensus +0.6%) disappointed. Recall that two weeks ago, several apparel retailers made cautious comments about their expectations for fourth-quarter earnings. The consumer discretionary sector added 0.8% for the week, extending its January gain to 3.2%.

Rate hike expectations barely budged during the past week. The implied probability of a hike in June ticked up to 69.7% from last Friday’s 69.0%, according to the fed funds futures market. (Parts taken from Briefing.com)

The World Economic Forum begins on Tuesday and has a track record of moving the financial markets in the past. But the highlight of the week (may not move markets) is Friday’s Inauguration Day when Donald Trump takes the Presidential Oath of Office at Noon Eastern.

Bonds

The bond yield curve fell from the 6 Jan close with the belly of the curve selling falling more than the 2 and 30 year maturities.

For the week (Monday to Friday), yields actually steepened the curve as Monday’s session closed with longer maturity yields falling more than the 2 and 5 years yields to flatten the curve at the start of the week.

(From 6 Jan 17 to 13 Jan 17)

Commodities mostly had a good week with Precious and Base Metals gaining while Energy prices finished weaker for the week.

Agriculture Closing Prices

THE WEEK AHEAD

Tuesday 17 to Friday 20 January (Week 03)

The third week of January (wk3) is bearish for the SPY and DIA over the last 10 and 15 years with the DOW carrying an average of 50% reliability and the SPY at than 50%. Over the last five years, however, both benchmarks have been bullish at 80%.

The 2017 Stock Trader’s Almanac’s averages for the DOW on Tuesday and Wednesday have a slightly bullish bias at 57% averagely. Thursday is bearish for DOW at 57% and bullish on  S&P500 at 52%. Friday is bearish for both DOW and S&P500 at an average 65%.

Key Economic Dates

Tue 17 Jan
• WEF (World Economic Forum) Annual Meetings
• UK CPI, PPI, RPI
• EU German ZEW Economic Sentiment
• US Empire State Manufacturing Index

Wed 18 Jan
• WEF Annual Meetings
• UK Unemployment Change, Average Earnings
• EU Final CPI y/y
• US CPI, Capacity Utilisation, Industrial Production
• Australia Employment Change, Unemployment Rate

Thu 19 Jan
• WEF Annual Meetings
• EU ECB Press Conference
• US Building Permits, Philly Fed Manufacturing Index, Housing Starts

Fri 20 Jan
• WEF Annual Meetings
• UK Retail Sales
• Inauguration Day: Donald Trump to take the Presidential Oath of Office at Noon Eastern

Earnings out next week for Q4 earnings

SUMMARY

A tale of three very different indices from the same economy. I have not seen such drastic divergences on the benchmarks since 2008. There’s no way to know what it all means but it is telling us that not all is well or proper in the market these days.

I have been on the sidelines for the most part as the last three years’ January months have given me reason to doubt January’s sentiment anymore. Apart from oil scalps, I am likely to not trade anything till I get really reliable statistics and low risk opportunities. For now, this equity market scares me.

Happy Hunting!! … if you can find anything to hunt.

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The End Of My Ten-Years At AKLTG (Adam Khoo Learning Technologies Group)

All good things come to an end and my 10-year association to AKLTG (Adam Khoo Learning Technologies Group) is no different as both AK and myself have outgrown each other over these amazing years together as the leading financial educators in the business. I am proud to have been associated with them and will forever be grateful for the opportunities that helped me achieve my dream of teaching and changing peoples lives. Now it is time for me to move on to pursue bigger challenges.

With effect from 24 November 2016, The Pattern Trader Tutorial sounded its intentions to leave AKLTG as its client and AKLTG has agreed to our separation. They will no longer be Pattern Trader’s exclusive marketing agent and/or exclusive event manager after 30 June 2017. (But that is not to say that we won’t be collaborating on ad-hoc projects in future.) So between now and 30 June 2017, AKLTG will still continue to market and manage the final few batches between now and June 2017 as part of the closing transition;

The Pattern Trader Tutorial will continue running on its own after June 2017 under a new entity as we evolve into the next phase of growth. The intention is to make the Pattern Trader Tutorial better and more exclusive with a more efficient syllabus, more complete content, state-of-the-art tools and massive digital support in the usual small-class environment, albeit with more bells and whistles. It will be the best learning experience for anyone who wants/needs the complete and holistic approach to understanding finance and economics with the most efficient and comprehensive tool kit for applying their skills in the most cut-throat business in the world.

All past graduates will continue to be supported by me and will still be considered my graduates as we move into the next phase. I intend to make this transition seamless so that they won’t have to worry about disruptions to our on-going and support programs.

I wish to thank each and every Coach/Jnr Trainer, past and present, that has helped me take the Tutorial to where it is today. We may have had our rough times but your contributions are never forgotten as testified by the credits in the ever-expanding training textbook that is in its 9th Edition today. To Lawrence, Henry, Alicia, Gary, Wai Seng, Soon Chung, “Duke” Alvin, Ruben, Pierre, Tok Tong, Woei Tang, Thomas, Dave, Yi Chuan, Sam, Chen Pang, Pei Fen, Soon Ghee, Irene, Jing Ting, Ethan, Paul, Jason, Roy, Diana, Leon, Jay, Ivan, Marc, Alvin, Aloysius, Alex, Adeline and Brian, your contributions and sacrifices will always be treasured and valued. Thank you.

To the many other volunteer coaches who came back selflessly to help out the newbies, to the many TSOs and operational and marketing staff, my deepest thanks for making it happen. Special mentions to Andrew, Queenie, Angie, Terrence, Wandy, Joey, Carol, Daniel, Annie, Pearlyn, Aaron, Ser Yew, Shi Jun, Shidiq, Shermin, Huiwen, Jeri, Caroline, Desmond, Lawrence and Joey.

To all my graduates and everyone who has passed through our doors, to all the students who are still working hard at mastering your craft, my sincerest appreciation for having faith in taking the journey with me. Thank you so much for taking that leap of faith and I hope I have not let you down. I would not be where I am if not for your constant support and encouragement. I am because of you.

If I have forgotten or missed out anyone, forgive me. Ten years is a lot to remember.

Finally, thanks to Patrick and Adam for sticking with me and putting up with my tantrums all these years. My prayers and blessings go with you on your ventures and may you have many more successful years ahead. Thanks for everything and thanks for being there when I needed it.

So now the future beckons as I finish up my final five-and-a-half months at AKLTG. It’s business as usual with many more lives to change. There is so much to be done and a mountain of work to chase. At the end of it, it is a challenge I yearn for and look forward to as I take my journey into the next chapter of my life.

To myself, I say, Happy Hunting!!

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Weekly Market Update – 09 January 2017 BMO

It wasn’t a bad week at all given all the Asian markets all closed with gains for the week. Australia’s S&P/ASX 200 was flat, with Singapore’s FTSE Straits Times Index adding 0.3%. Korea’s Kospi ended up 0.4% on news that Samsung Electronics estimates it would deliver its biggest quarterly operating profit in more than three years for the fourth quarter.

US MARKETS (Parts taken from Briefing.com)

The US finished the week on a sour note as economic numbers disappointed. Nonfarm Payrolls came in below expectations while the Unemployment Rate remained virtually unchanged at 4.7%. Trade deficit was wider than expected as the November Trade Balance report showed a widening in the deficit to $45.2 billion (consensus -$42.2 bln) from an upwardly revised deficit of $42.4 billion (from -$42.6 bln) for November.  The key takeaway from the report is that the widening deficit will be a drag on fourth quarter GDP, as the fourth quarter average of $61.9 billion for the real trade deficit is 9.4% higher than the third quarter average. Factory Orders went down in November as new orders for manufactured goods decreased 2.4% in November (consensus -2.1%) after increasing an upwardly revised 2.8% (from 2.7%) in October. November marked the first decline in factory orders in five months. The drop in manufacturing orders was owed predominately to a large retreat in orders for the volatile nondefense aircraft and parts component.

DOW Friday 6 January 2017 – Misses 20,000 by a dime.

In spite of of the hawkish numbers, the stock market closed the week on a higher note, with the S&P 500 and the Nasdaq finishing Friday’s session higher by 0.4% and 0.6%, respectively. The Dow (+0.3%) finished the day 34 points shy of the elusive 20k mark after coming within one point of the milestone early Friday afternoon.

Standings for the week look much the same as ten out of eleven sectors finished the week higher, with telecom services (-1.2%) bucking the trend. The week’s top performer was health care (+2.9%), followed closely by real estate (+2.2%), technology (+2.4%), and consumer discretionary (+2.3%). The consumer discretionary sector’s gain was particularly impressive as the sector had to overcome a poor week from retailers. The SPDR S&P 500 Retail ETF (XRT 43.76, -0.26) finished the first week of 2017 lower by 0.7% after some of its components reported disappointing holiday sales.

Conversely, small caps ended the week on a down note as the Russell 2000 fell 0.4% in Friday’s session. On the week, the small-cap index added 0.7%, but underperformed relative to the S&P 500’s and the Nasdaq’s respective, 1.7% and 2.6% week-to-date gains. Given that the domestically-focused Russell 2000 set the pace for the post-election rally, investors may be concerned about the index’s recent struggle.

Bonds

Bonds has a volatile shortened week of trading that saw yields rise and then fall and close lower for the week.

It is much too soon so say what the yields are implying but going back a month shows us that yields have been flattening again and Since the start of the year, it has pivoted on its belly. Doubt is still on the table.

(From 30 Dec 16 to 6 Jan 17)

Commodities mostly had a goods start to the year with Precious and Energy prices finishing higher for the week.

Agriculture Closing Prices

THE WEEK AHEAD

Tuesday 09 to Friday 13 January (Week 02)

The second week of January (wk2) is bearish for the SPY and DIA over the last 5 years, 10 and 15 years with the DOW carrying around than 50% reliability and the SPY at than 60%.

The 2017 Stock Trader’s Almanac’s averages for the DOW on Monday, Tuesday and Wednesday are bearish at around 58%%  and bullish on Thursday and Friday at around 55%.  The S&P500 is broadly flat for the week with a slightly bullish bias on Tuesday, Wednesday and Friday at an average of 55%.

Key Economic Dates

Sun 08 Jan
• Australia Building Approvals m/m
• China CPI and PPI

Wed 11 Jan
• UK Manufacturing Production m/m, Goods Trade balance

Fri 13 Jan
• US Core Retail Sales m/m, Retail Sales m/m, PPI, Consumer Sentiment

Earnings out next week as Q4 earnings season kicks off

SUMMARY

For the record, I am bearish for the coming week until JPM’s earnings on Friday BMO. With little economic numbers to move the market properly, volumes are not expected to come in full force as the general trading volumes wait for the start of earnings season.

Happy Hunting!!

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Weekly Market Update – 03 January 2017 BMO

Its back to business and before we get too excited, let’s not forget that this week is heavy with employment numbers and next week is the start of Earnings Season for Quarter 4 results. Given the bullish nature of October’s earnings results and the many surprises it brought, I will be looking for more of the same this season if this rally is meant to continue.

US MARKETS

The major indices finished the year with some gains that didn’t seem likely a month before the elections. For the most part, the major indices were flat after the initial volatility between January and March. It wasn’t until election season and that fruitful October earnings season that the market really started to move.

DOW YTD

Let’s be reminded that January hasn’t been a good month for the US markets in the last three years but as statistics go, January is actually supposed to be a bullish month. It is also the month where we get a few Self-Fulfilling indicators such as the “First Five Days” indicator and the “January Barometer” that points to where the market is likely to finish the year … although that wasn’t the case last year. These indicators have a high statistical record for accuracy but they do tend to fail occasionally.

Talking about Self-Fulfilling Prophecies, looks like we didn’t get a Santa Claus Rally. That usually means that the following year is likely to be weak – again, something that didn’t happen last year – although statistics don’t really show overwhelming proof of this. But let’s not discount any possibilities because there is one statistic that does scare me with a very impressive track record – the year ending with the number “7”. You can read about it in my Summary in the monthly update.

Bonds

It was pretty much touch-and-go for bonds during the middle of 2016 as the yield curve flattened and threatened to pivot on its belly.

By the year’s end and a new president later, yields closed broadly higher and steeper for the year implying that a bull run in risk may be in order moving into 2017, at least for the next six months.

(From 4 Jan 16 to 30 Dec 16)

Commodities were a mixed bag in 2016 with Gold and Silver making seasonal gains in the first half of the year and losing it all by the end of the year to finish almost unchanged for the year. Copper was a winner and Energy prices all closed higher than it opened at the start of 2016.

Copper is going to be my security to watch for 2017. If there is to be any upside in risk, Copper has to lead and that is where my money will be.

Agriculture Closing Prices

Out of all the agriculture counters, #11 Sugar, Coffee and FCOJ were the standout winners in 2016 while Cocoa was a spectacular loser.

Brent, Gold, Corn, WTI, Silver, Wheat, Nat Gas, Copper, Sugar

THE WEEK AHEAD

Tuesday 03 to Friday 06 January (Week 01)

The first week of January (01) is bearish for the SPY and DIA over the last 5 years, 10 and 15 years with the DOW carrying more than 50% reliability and the SPY less than 50%.

The 2017 Stock Trader’s Almanac’s averages for Tuesday and Wednesday are 66.7% bullish on the DOW with Thursday and Friday being flat.  The S&P500 is broadly flat for the week with a slightly bullish bias on Wednesday, Thursday and Friday at an average of 53%.

Key Economic Dates

Tue 03 Jan
• EU German Prelim CPI, Unemployment Change
• UK Manufacturing PMI
• US ISM Manufacturing PMI

Wed 04 Jan
• EU CPI Flash Estimate
• UK Construction PMI
• US FOMC Meeting Minutes
• China Caixin Services PMI

Thu 05 Jan
• UK Services PMI
• EU ECB Monetary Policy Meeting Accounts
• US ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI
• Australia Trade balance

Fri 06 Jan
• US Non-Farm Employment Change, Unemployment Rate, Trade Balance, Factory Orders
• US FOMC Member Evans Speaks (12:15EST)

SUMMARY

Singapore bounced back from negative growth this morning reporting that;

Singapore’s economy grew a seasonally adjusted annualized 9.1 percent on quarter in the three months to December of 2016, following a downwardly revised 1.9 percent contraction in the previous period and beating market expectations of a 3.7 percent expansion, the preliminary estimate showed. It was the strongest growth rate since the second quarter of 2013, mainly due to a rebound in manufacturing (+14.6 percent from -8.1 percent in Q3) and services (+9.4 percent from -0.4 percent) while construction continued to fall (-4.7 percent from -14.8 percent).

What’s worrying about that number is whether we’re able to sustain it next quarter or are we likely to see a contraction because the previous quarter was overblown? Given that the Island State hasn’t been faring well, that unemployment is still on the rise and that consumer spending, property prices and money flow has slowed, how will 9.1% realistically be sustained (I am not even bothering to ask how 9.1% was achieved) in such weak circumstances.

Happy Hunting!!

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Comments Off on Sector Report 1612 : Big Pharma 2016

Sector Report 1612 : Big Pharma 2016

Pharmaceutical-Marketing

We begin the new year with some defensive stocks in the form of Big Pharma. With much of the global economy looking unwell and on the verge of a major fallout, it might be wise to stock up on some defensive plays and fixed income safety as we embark on what might be a tricky year for the bulls.

For the full download, go to: Sector Report 1612 : Big Pharma 2016

Report includes market and economic outlooks for US and Singapore.

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Comments Off on December 2016 In Review, January 2017 Preview

December 2016 In Review, January 2017 Preview

2017 Calender on the red cubes

In a blink of an eye, another year has passed. That effectively completes 10 years of professionally teaching finance and economics under AKLTG’s roof and 12 years of teaching altogether. Now 2017 opens a new door of opportunities for me.

But before we move forward, a quick look back at 2016 and I am not sorry to see it go. I lost a few friends, a couple of my graduates and a whole bunch of celebrity icons that I grew up with in the past year. When I look back on the year, I find very few things that made me smile compared to the many things that upset me. There were some high points like my vacations to Switzerland and Spain along with some joyful moments like having both my kids pass and attain their driver’s license. But all in all, it was a challenging year.

We were warned before it began that 2016 in numerology made the number ‘9’ which signifies ending or closure. Nine is a finishing number, and represents the end of a cycle. But with endings come new beginnings. 2016 was a very karmic year. It was a time that we received the karma from the good or the bad we have done. It was a chance to end something once and for all. Some thing in your life had to come to an end. Now this doesn’t have to be a bad thing. Endings can be good. Nine is also the number of the humanitarian. That means 2016 is a year of completion, rest and forgiveness.

2017 will be a One. One is a number of beginning. 2017 bids us all to start something brand new, something that expresses our uniqueness, that uses our leadership abilities, that opens us to new perspectives. 2017 as a One year is a time to think and act independently. It’s also a year to put leadership abilities and unique talents to use in the wider world, to practice cooperating without losing individuality. The number One is the maestro, the director of activities and events. One is a number about beginnings and new initiatives of all kinds.

So, Goodbye 2016 and I pray we don’t have another year like this for a long long time. Hello 2017 and bring on the changes!

But before we embark on a new year and new ventures, a vacation was in order and this year, the family and I went to Spain!

IMG_4612IMG_0268IMG_0421IMG_3951IMG_7424IMG_6362IMG_4636IMG_4678IMG_4680IMG_4684IMG_4686IMG_7313IMG_4658IMG_4773IMG_4777IMG_4778IMG_4781IMG_4782IMG_4785IMG_4786IMG_9686

As always, we brought back many memories and moments that we will treasure for the rest of our lives. Like the one time we get to be in Naboo, home of Padmé Amidala to do something we’ve always wanted to do …

15541134_10155509351007656_2628312902962685020_n

TUTORIAL MATTERS

On 11 December, PTTMY34 wound up their two weekends of the Bootcamp to complete the year’s compilation of classes.

PTTMY34

And what a wonderful batch it was too. The energy was amazing and kept be going in spite of being unwell and suffering a nagging cough. Keep up the energy and enthusiasm, MY34. We’ve got a lot more work in store!

I still find it hard to fathom that what started out as a hobby has turned into such an overwhelming success that a total of 133 batches (87 in Singapore, 34 in Kuala Lumpur, 12 in Jakarta and 5 in Penang … less batches 04 and 44) have been completed in the ten years I have been teaching professionally. The Tutorial has come a long, long way to where it is today which is more complete than I could have imagined ten years ago.

For 2017, the Pattern Trader will be moving on to newer and bigger things. There will be significant changes made through the first half of the year that will will make the Tutorial and its Tools more complete and way more effective than it has ever been. These are exciting times for the Pattern Trader.

MARKET MATTERS

DOW YTD

As you can see, the year for the most part was flat as hell. Between April and the start of November, both the DOW and S&P500 struggled to make gains. It wasn’t until the election period and the Trump win that the market really made significant gains. The other talking point for the year was Brexit that saw a major drop in the markets between 23 and 27 June.

GBP:USDThe drop on the GBP against the USD has not recovered since and seems set to take a further drop if the US continues to hike its rates in 2017.

Against the SGD, the GBP closed the year out at 1.7836 when it was trading above 2.00 for almost three years before Brexit.

So what’s next for the great American economy under the reign of a new and controversial president with a government that has as much experience in running a country as the president has – which is nothing really – and can they make America great again?

The general American population seems to be rueing the fact that Trump is the new Commander-In-Chief but the market seems to like the idea a lot. With the cabinet he has put together, it would seem like Wall Street has done it again by getting a leader that will see the market make another great leap upwards in spite of already being overbought and overvalued in most areas.

Its economy is still buoyant with much headroom to expand into. Almost every aspect of its economy (save manufacturing) has been serving healthy numbers especially Employment. Unemployment fell to 4.6% in November 2016 from 4.9 percent in the previous month. It was the lowest jobless rate since August 2007. Even Janet Yellen’s plans to bring up the Inflation Rate to 2% has seen it rise to 1.7%, the highest inflation rate since October 2014, mainly boosted by higher energy cost while food prices continued to fall.

WTITalking about energy prices, with so much that has happened, it is easy to forget that WTI was trading under $30p/b less than 12 months ago.

We shouldn’t forget that a lot of the world’s problems now are because of the low price of Crude Oil. And before we get too excited about Crude breaking higher, note that it closed out the year without breaking above $54p/b, a resistance level going back to December 2014. Crude has not breached that level since July 2015.

Given the current economic state of discussions between OPEC and the other oil producing economies, little has been accomplished to warrant higher highs on the black stuff especially when most of the participants are only interested in their individual bottom lines rather than the greater good. Seasonally, energy is coming into its best months between February and May. If there is a reason for oil to rally, it would be this seasonal run. However, keep an eye on the cold months of January and February that could change the mood of the energy trade.

SINGAPORE

The Little Red Dot is having a tough time. Job cuts amidst a slowing economy is slowly taking its toll on every level of business. The year began with cuts in the marine industries followed by the oil and energy sectors then the manufacturing sector. The banking sector then saw massive layoffs that put hundreds of investment bankers, traders and the like, out of work. Now the materials sector is taking the brunt of the slowdown.

SG Inflation

The inflation rate had been negative for 12 months coming into 2016 and its deflationary factor took a toll on the retail sector that saw many enterprises fold resulting in the empty stalls and shops in most of the malls in town today. As of November 2016, Singapore registered 24 straight months of Deflation and today sits at 0%, breaking the negative run on inflation.

Screen Shot 2016-12-31 at 10.28.29 PMWe’re not out of the woods yet.

Property prices continue to fall. For three straight years (12 quarters), Singapore’s residential property price index has fallen to 2010 levels with no clear sign of recovery on the horizon.

This comes amidst slowing consumer spending and a massive Households Debt-to-GDP at 61.1%, the highest level in the country’s history.

All this is going to pile up on The Red Dot’s woes in 2017 as it struggles against its neighbours who have tied in closely with China’s economic expansion plans. Singapore, it seems, have been left out of that equation. To make matters worse, China has taken offence to Singapore’s ties with Taiwan by confiscating nine military vehicles that were en route via Hong Kong. The Lions have made their firm political stand and will not be bullied by China. But what will this do for trade?

I have never been a big fan of China’s economic practices but I am not a fan of pissing them off either.

Screen Shot 2016-12-31 at 10.48.59 PM

Singapore’s market has already been in the doldrums since falling from its April 2015 highs. The STI has not registered a gain since August 2015 and has been broadly flat since December 2009.

Screen Shot 2016-12-31 at 10.39.37 PM

We’re in for a very rough 2017 and it won’t surprise me that growth contracts more than the -2% registered last quarter to put the Island State into its first full blown recession since the Sub-Prime.

JANUARY PREVIEW

January 2017 has 20 trading sessions and two holidays. January is usually a bullish month and is famous for its January Barometer prophecy – “As goes January, so goes the year”. This implies that if January closes with a gain, so should the rest of the year. But if January closes with a loss, we’re in for a tough year (although last year wasn’t).

Also watch for the “First Five Days” indicator that is as reliable as the January Barometer – if the first five sessions of the year finishes with a gain, the year is often bullish. If they lose, the year will likely be bearish.

January is the last month in the “Best Three Consecutive Months” in a trading year – November, December and January – that has seen the DOW make gains 15 of the last 22 years. However, the last three years going back to 2014 has seen January go down.

JANUARY TRIVIA

Key Economic Dates

Mon 02 Jan
• China Caixin Manufacturing PMI

Tue 03 Jan
• EU German Prelim CPI, Unemployment Change
• UK Manufacturing PMI
• US ISM Manufacturing PMI

Wed 04 Jan
• EU CPI Flash Estimate
• UK Construction PMI
• US FOMC Meeting Minutes
• China Caixin Services PMI

Thu 05 Jan
• UK Services PMI
• EU ECB Monetary Policy Meeting Accounts
• US ADP Non-Farm Employment Change, ISM Non-Manufacturing PMI
• Australia Trade balance

Fri 06 Jan
• US Non-Farm Employment Change, Unemployment Rate, Trade Balance, Factory Orders
• US FOMC Member Evans Speaks (12:15EST)

Sun 08 Jan
• Australia Building Approvals m/m
• China CPI and PPI

Wed 11 Jan
• UK Manufacturing Production m/m, Goods Trade balance

Fri 13 Jan
• US Core Retail Sales m/m, Retail Sales m/m, PPI, Consumer Sentiment

Mon 16 Jan
• China GDP, Industrial Production

Tue 17 Jan
• WEF (World Economic Forum) Annual Meetings
• UK CPI, PPI, RPI
• EU German ZEW Economic Sentiment
• US Empire State Manufacturing Index

Wed 18 Jan
• WEF Annual Meetings
• UK Unemployment Change, Average Earnings
• EU Final CPI y/y
• US CPI, Capacity Utilisation, Industrial Production
• Australia Employment Change, Unemployment Rate

Thu 19 Jan
• WEF Annual Meetings
• EU ECB Press Conference
• US Building Permits, Philly Fed Manufacturing Index, Housing Starts

Fri 20 Jan
• WEF Annual Meetings
• UK Retail Sales

Mon 23 Jan
• EU, French, German Flash Manufacturing PMI, Flash Services PMI, German Iso Business Climate

Tue 24 Jan
• US Existing Home Sales
• Australia CPI q/q, Trimmed Mean CPI q/q

Thu 26 Jan
• EU German Prelim CPI m/m, Spanish Unemployment Rate
• UK Prelim GDP q/q
• US New Home Sales
• Japan Household Spending y/y, Tokyo Core CPI y/y

Fri 27 Jan
• EU Spanish Flash GDP q/q, M3 Money Supply y/y
• US Durable Goods Orders m/m, Advance GDP Price Index q/q, Consumer Sentiment

Mon 30 Jan
• EU Spanish Flash CPI y/y
• US Core PCE Price Index m/m, Personal Spending m/m, Pending Home Sales
• Japan Monetary Policy Statement, BOJ Outlook Report, BOJ Policy Rate

Tue 31 Jan
• Japan BOJ Press Conference
• EU CPI and Core CPI Flash Estimate y/y, Prelim Flash GDP q/q,
• EU German Retail Sales m/m, German Unemployment Change
• US Chicago PMI, Consumer Confidence
• China Manufacturing PMI, Non-Manufacturing PMI

Commodities

SUMMARY

Next year is a year ending with the number seven. Years ending with 7 have a bad karma because history has proven so;

• 2007 (Sub-prime Mortgage Crisis)
• 1997 (Asian Financial Crisis)
• 1987 (Housing Bubble Recession)
• 1957 (DOW Triple Top)
• 1937 (Property Bubble and Credit Tightening)
• 1917 (Inflation – WWI)
• 1907 (Post San-Francisco Earthquake)

Given the way the Asian economies are going and how overbought the US economy is, it would be timely for the markets to take a break. I will be expecting a lot of volatility in 2017 and it won’t surprise me if ‘recession’ becomes the watchword for the year.

Now that the endings are done, we await new beginnings.

To all my readers, I wish you all a profitable and prosperous 2017. Stay safe, be wise and avoid taking that unnecessary risk if you don’t have to.

Happy Hunting Always!

HNY

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Comments Off on Sector Report 1611 : Transportation 2016

Sector Report 1611 : Transportation 2016

transport_2

It has been almost two years since we last featured the Transports. Now with the Trump win behind us, the market seems to be betting that industrials are going to be back in form when he takes office in January.

I personally have a soft spot for this industry that has seen better days in years past. Let’s see if the Trump era can bring this industry back to its glory days.

Get your issue here: Sector Report 1611 : Transportation 2016

 

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Comments Off on November 2016 In Review, December Preview

November 2016 In Review, December Preview

Donald-Trump-wins-graphic

November began with much doubt and confusion. Now that the month is done and dusted, there is less confusion but more doubt. America has voted and Trump is going to take the White House in January. Going by his current actions, it will be the same old Wall Street oriented government with all the same type of toxic office bearers in place to serve Broad and Wall with policies that won’t help the street much. I wonder if America did indeed vote the worse of two evils.

It was also a month of political madness in South East Asia but I am not going to get into all that happened in the Philippines, Malaysia and Thailand. Suffice to say, my home country has more than enough of its own problem to keep me busy without worrying about the affairs of our neighbours. And it is not looking too bright for the Little Red Dot.

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TUTORIAL MATTERS

On the weekends of 4th to 7th and 11th to 13th November, PTT87 got their Bootcamp and are now working hard on their Post Graduate Assignments. Great gang with lots of energy. Keep that energy going and keep working together. This is only the start of a long journey.

PTT87

On 29 November, the third batch of the revised Post Graduate Tutelage completed their four week session with much enlightenment. Now to put into practice everything you’ve learnt and make it work. Remember to stay defensive and conservative as you start out. Good luck!

PGT03

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MARKET UPDATE

At the end of October, I mentioned that major markets of the world weren’t able to make higher highs from more than a year ago and looked very congested at their tops. However, a month and a US election later, the US indices have broken new highs.

DOW

Of course, it remains to be seen if this Trump Rally has the legs to carry on into 2017. As it stands, the US economy doesn’t seem weak enough to warrant a bearish outlook. On Tuesday 28 November;

The second estimate for third quarter GDP showed growth was revised up to an annual rate of 3.2% (consensus 3.0%) from 2.9% in the advance estimate while the GDP Deflator was revised down to 1.4% (consensus 1.5%) from 1.5%.

The important takeaway from the second estimate is that the upward revision was driven by an increase in personal consumption expenditures growth, which contributed 1.89 percentage points to third quarter GDP growth versus 1.47 percentage points in the advance estimate.

The contribution from net exports was revised slightly higher while the contributions from the change in private inventories, government spending, and gross private domestic investment were all revised lower.

The third quarter of 2016 marked the first time since the third quarter of 2014 that there was at least a three-handle on GDP growth.”

~ Briefing.com

Employment is still buoyant and the industrial side of America seems to be on the mend with Trump promising to bring jobs back and companies responding by bringing back production and manufacturing.

Given that the market is embarking on its “Best Six Months’ on the DOW and S&P, I have little reason to be bearish, save the volatility of January in the last three years.

Fed Chair, Janet Yellen’s language has had more conviction towards higher rates that could well happen on December 14 at 2pm EST. If it happens, this should give the market a jolt in the immediate days following that announcement but the US will be better for it in the longer term seeing how higher rates have always benefitted an America that produces and manufactures.

In Asia, however, the picture is not as bright.

SINGAPORE UPDATE

DeflationSGThe Little Red Dot yet again extended its longest historical run of negative inflation to 24 consecutive months. However, the most recent number revealed that inflation may finally be on its way back up again.

The rest of the economy, sadly, remains mired in doubt as more jobs get cut and businesses shut down or scale down.

To add to the Island State’s woes, China confiscated nine military vehicles from the Singapore Armed Forces on the way back from Taiwan being shipped through Hong Kong. It is still unknown if the reason for this retaliatory tactic is because of Singapore’s stance on the disputed islands that rubbed China up the wrong way or if it is because China felt offended that Singapore kept alliances with Taiwan with no due respect for China.

One thing is clear, Singapore has continually been left out of China’s expansion plans into the region. Their construction of an island airport in the South China Sea, a port in Malacca to rival Singapore’s and major development projects around the Johor Straits hint at targeting Singapore as an economic rival. Rather than to tie up alliances and work with the Island State, China has preferred to look at Singapore as a cause for concern. Their expansion plans and trade deals have continually left Singapore out of the equation and is likely to leave the Little Red Dot in isolation, surrounded by China’s economic allies in Malaysia, Philippines and Indonesia. This will be a major cause for concern for Singapore if it loses its grip on being a transportation, trade and financial hub.

USDSGDThe SGD is currently taking a beating from the USD as regional currencies also tumble against the strength of the Greenback.

This has alarmed the MAS especially if the US raises its Fed Fund Rate and triggers capital outflows. This will play right into the hands of China. The Singapore Dollar has long been the strongest currency in Asia. For long stretches in recent history, it was the strongest in the Asia-Pacific region too. It is this strength and stability that has kept investors confident in the country’s financial services. Investor confidence will be affected if China’s ostracization of Singapore does not serve the needs of these investors who wish to do business in with China. This may lead to massive capital outflows to places like Indonesia who have been restructuring their financial system to attract investor monies out of Singapore and into their capital, Jakarta. Such capital outflows will surely hurt Singapore’s position as a regional financial hub.

STIAs of the close of Wednesday 30 November 2016, the STI was barely up by 0.70% year-to-date at 2,904.14 and down 17.65% from the high of April 2015 (3,525.19).

This is going to be a painful period for the Little Red Dot going into 2017.

DECEMBER PREVIEW

December 2016 has 21 full trading sessions and one trading holiday (Monday 25th). December is the second of the market’s best six months the year between November and April and the last month of Q4.

December is famous for its Santa Claus Rally that traditionally begins three to five days before Christmas and ends three days after the New Year. However, when we don’t get a Santa Claus Rally, it usually means that the following year is going to be weak or extremely volatile.

DECEMBER TRIVIA

DIA Thursday 01 December to Friday 02 December (Week 48)

The first two days of December 2016 (48) ends a usually bullish week, carrying more than an 80% probability on the DIA and SPY over the last 5 years, more than 70% on the DIA and SPY over the last 10 years and more than 60% for the DIA and 73% for the SPY over the last15 years.

The 2016 Stock Trader’s Almanac’s averages for the S&P500 is bearish on Thursday at (52%). DOW gets bearish on Thursday (57%) and Friday (52%) and the S&P500 closes the week slightly stronger for the bulls at 52%.

Monday 05 December to Friday 09 December (Week 49)

The second week (49) has less than an average 60% probability for a short trade on the SPY and DOW over 5, 10 and 15 year averages.

The 2016 Stock Trader’s Almanac’s averages for Monday are 66% bullish with Tuesday turning bearish. On Wednesday and Thursday, DOW and S&P stay more than 55% bearish and finishes the week with a 60% probability of being bullish.SPY

Monday 12 December to Friday 16 December (Week 50)

The third week (50) has less than a 50% probability for a long trade on the DIA and SPY over 5, 10 and 15 year averages.

The 2016 Stock Trader’s Almanac’s averages for Monday and Tuesday are around 55% for a bearish trade on the DOW and S&P500. The S&P500’s weakness continues into Wednesday at 57%. However, DOW strengthens on Wednesday at 52. Both benchmarks finish the week stronger at 52% bullish on Thursday and a 59% average on Friday.

Monday 19 December to Friday 23 December (Week 51)

The fourth week of December (51) is bullish for the SPY and DIA over the last 5 years at 100%. Over 10 and 15 years on the SPY and DIA, there is an 80% for a long trade.

The 2016 Stock Trader’s Almanac’s averages for the DOW and S&P500 on Monday and Tuesday are around 55% bearish but Wednesday and Thursday are bullish at 75%. Friday stays bullish for both indices at 52%

Monday 26 December to Friday 30 December (Week 52)

The final week of December (52) have extremely divergent probabilities over the 5, 10 and 15 year averages on the DIA and SPY. It has been extremely bearish on both benchmarks over the last 5 years at 100%

The 2016 Stock Trader’s Almanac’s averages for Tuesday is bullish at 81% for the DOW and S&P500. Wednesday to Friday is slightly bearish for the DOW (55%) while S&P500 is slightly bullish on Wednesday and Thursday at 57% and bearish on Friday at (66%).

Key Economic Dates

Thursday 01 December

Friday 02 December

Monday 05 December

Tuesday 06 December

Wednesday 07 December

Thursday 08 December

Friday 09 December

Monday 12 December

Tuesday 13 December

Wednesday 14 December

Thursday 15 December

Friday 16 December

Sunday 18 December

Monday 19 December

Wednesday 21 December

Thursday 22 December

Friday 23 December

Monday 26 December

Tuesday 27 December

Wednesday 28 December

Thursday 29 December

Friday 30 December

Commodities

SUMMARY

I have only one more weekend to fulfil in KL next weekend as I finish up my teaching year for 2016. It has been an amazing year that saw six out of ten batches in all of SG, KL and PG totally sell out. Needless to say, I have had a busy year but busy is always a good thing.

Next year could be a different story but it is still a month away. I am only interested in the month ahead because it is my favourite month for vacationing!! And that is all I am looking forward to right now!

Happy Hunting!!

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Comments Off on Market Update – 21 November 2016 BMO

Market Update – 21 November 2016 BMO

bird+flu+640

Bird Flu is back. And this time, it’s spreading quicker than last time. Germany, Austria, Switzerland, Hungary, Poland, Holland, Denmark and Croatia with H5N8, Korea with H5N6 … you kinda wonder if we’re not taking this seriously enough though? This shit is getting real thick at a time when we really don’t need more shit.

The European report: Bird Flu Hits Europe
The Korean report: South-korea-confirms-highly-pathogenic-h5n6-bird-flu-outbreaks

Every time in recent history, before a major economic downturn, we had some major outbreak to help springboard the economy into recession and exacerbate the situation. Looks like history is out to repeat itself.

Have you gotten your flu jabs and masks yet? (GSK, HEB, NVAX, SVA, VICL)

US MARKETS

The DOW broke to a record high on Tuesday, closing at 18.923 before stalling out for the rest of the week while on Thursday, the S&P500 came within three points of August’s historical high of 2,190.

Screen Shot 2016-11-21 at 9.28.41 AM

Has the Trump Rally run out of steam? For the time being, maybe. But I am guessing that it won’t be for long more. The markets are going into its best period of the year to be a Bull and I am not discounting the possibility of more upside in the coming weeks especially when Black Friday/Cyber Monday is this weekend.

Yields

Yields jumped to their 2016 highs as if to indicate that this rally has more legs to come as the U.S. Dollar Index rallied for its 10th consecutive session to close out Friday’s session +0.33% up at 101.22. (Click chart to expand)

Commodities has had a wild November so far with Gold getting pummelled from 1305/troy oz to 1209/troy oz while copper rose from 2.21/lb to 2.54/lb and settled at 2.47/lb on Friday. Crude oil seems to be holding its uptrend after getting hit in October.

For the pattern aficionados, check out this Symmetrical Flag (daily candles) on Copper (/HG) if you were wondering if the metal had any more potential upside. 

Screen Shot 2016-11-21 at 10.02.54 AM

But as with all things, patterns can also fail … and that’s what I am hoping for because prices move down faster than they rise.

Agriculture Closing Prices

More than 95.0% of S&P 500 components have now reported their third-quarter results, showing an earnings growth rate of 3.0%. Results for the quarter have exceeded expectations as more than 72% of the S&P500 beat their estimates with an increase in revenues not seen in more than 2 years. With earnings season and election season over, we can now focus on getting back to normal trading.

THE WEEK AHEAD

Monday 21 November to Friday 25 November (Week 47)

The fourth week of November (47) is flat for the SPY and DIA over the last 5 years. Over 10 and 15 years on the SPY, there is between 60% to 70% for a long trade. DOW remains unimpressive over its 10 and 15 year averages.

The 2016 Stock Trader’s Almanac’s averages for Monday, Tuesday, Wednesday and Friday are between 52% to 66% bullish on the DOW and S&P500.

Key Economic Dates

Monday 21 November

Wednesday 23 November

Thursday 24 November

Friday 25 November

SUMMARY

Singapore’s economy is on the brink of Recession. The US market looks like breaking higher. Europe is fighting a pandemic. South America’s economic problems worsen. Asia is banking on China to keep things buoyant. However, China’s economy and market are not all that great.

What happens in the next weeks leading into January is going to determine where all this ends up in 2017. Right now, there is very little to suggest that we’re going to have a good time. The job losses are mounting on The Little Red Dot and businesses are scaling down and even winding up more regularly now than all through 2016. And as with recessions past, things on the street don’t look worrying as people still continue to spend and have a good time. But lest we forget, the economy lags behind the market by six months to a year.

Screen Shot 2016-11-21 at 10.45.11 AM

And that picture paints a thousand fears.

Happy Hunting!!

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Comments Off on Market Update – 14 November 2016 BMO

Market Update – 14 November 2016 BMO

Screen Shot 2016-11-09 at 4.18.07 PM

That poster is NOT about Trump ruining the US economy. It is about the great divide that this election has created. America is now a country divided. It is also about the future of corporate America because the result if not going to favour the big banks, large conglomerates and oligopolies in the long term. Maybe that’s a good thing because it will favour the street instead. It is time for change and it is time for the small guy in the street to get some instead of making the rich richer anymore. (I hope some of our out-of-touch, over-entitled ministers are reading this – I hope you realise what this warning shot is about.)

The Donald is President … at least he will be on 20 January next year. Futures tanked -800+ when it became obvious that he was on track to win it but retraced as quickly as it tanked to recover to -200 before the open. The market then rallied as if to approve of his Presidency to close Wednesday with a more than 1% gain.

Screen Shot 2016-11-10 at 2.45.00 PM

In a week that was supposed to flat, the week became one of the most volatile for the year.

Going into the third week of November, we’ll be looking for the dust to settle and hopefully return the market into some sort of normalcy. After breaking to historical highs on Thursday and Friday in five straight sessions to the upside, the DOW is starting to look a little worn out with the UVOL and DVOL in a  1-for-1 match throughout Friday’s session.

DOW11-11YTD

During the week, December copper spiked to an 18-month high at 2.70 before settling at $2.51/lb, bonds sold off sending yields to 11-month highs, the Dollar strengthen against all the major currencies, Gold closes near a 4-week low settling at $1225.10/oz and December crude oil futures fell to $43.39/barrel.

Quite a week. The question now is whether those prices will stick or are they going to return to whence they came. Here’s how the various industries settled;

Screen Shot 2016-11-14 at 11.44.51 AM

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EARNINGS UPDATE

With earnings season winding down this week, it is quite safe to say that this round of earnings have been the best batch of reports after five consecutive quarters of year-over-year earnings declines. Out of the 91% of the S&P500 companies that have reported so far, 70% have beat earnings estimates while 22% have missed. These are the usual types of percentages we often see in normal markets. Furthermore, third quarter sales and earnings for the S&P500 are up 3% YonY.

Earnings growth were predominantly from Real Estate (+35%), Utilities (+16%), Staples (+8.5%), Financials +(8%), Technology (+7%), Materials (+6.4%), Discretionary (+6.3%), and Health Care (+5.7%). Earnings were lower in among Energy (-62%), Telecommunications (-1.6%) and Industrials (-1.3%). Third quarter sales were up 2.9% and are now expected to end the quarter up 2.7% after growing 0.2% last quarter (2Q16) and falling 3.8% last year.

This week’s reporting will focus on Retail earnings. Notable reports out this week include:

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THE WEEK AHEAD

Monday 14 November to Friday 18 November (Week 46)

The third week (46) has less than a 60% to 70% probability for a long trade on the DIA over 5, 10 and 15 year averages. The SPY is weak with 50% of a chance for a short trade.

The 2016 Stock Trader’s Almanac’s averages for Monday and Tuesday are around 60% for a bullish trade on the DOW and S&P500. The S&P500’s strength continues for the rest of the week at 52% for the bulls. However, DOW weakens on Wednesday and Thursday with a 53% bearish factor before giving the bulls a 52% chance on Friday.

Monday 14 November

Tuesday 15 November

Wednesday 15 November

Thursday 17 November

SUMMARY

A host of critical economic data should be a nice distraction in the coming week from the election fallout. I don’t expect it to be as bullish as we’ve had it last week but don’t expect a tanker either. I reckon it is going to be an uneventful week that should close flat-to-upside.

Over the weekend, a 6.2 magnitude quake near the east coast of Honshu, Japan and Wellington, New Zealand where a 7.8 magnitude quake killed two and triggered a tsunami warning were timely reminders that life is way too fragile and precious to worry about the opinions of a nation divided by a President. Latest news is that a magnitude of 6.2 has struck northwestern Argentina.

Pray for the affected. And pray that this is the last of it for a long time to come. Three in one weekend is more than we should bear.

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