The markets seem to have topped out in most economies and looks likely to continue its volatile consolidation. This month’s report revisits “safe” trades in the form of the Food Products industry. The last time we featured this sector in 2010 produced quite a few winners.
We also have an extended market report this month.
Get your report now:
Just like that, half the year is gone. June was a very short month for me in spite of not doing any classes except for a gathering and a pair of very memorable Candlestick/Breakout Patterns Workshops in Singapore and K.L.
Other than that, it was a month of getting back to fitness and resuming my expansion plans for next year. So without much to talk about or show, let’s get straight to the crux of the current issues regarding the markets.
Things around the world have not been great, to say the least. Greek banks have shut down to prevent a run on the banks, China is looking like capitulating after a magnificent parabolic run on easy money, Singapore has fallen into negative for the year, the Ringgit hit 2.80 against the SGD, commodities continue to find new lows and the American market is still flat for the year after six months of trading.
As of the close of Monday 29 June 2015, the Dow Jones Industrial average closed in negative territory for the year, again. This was its 13th failed attempt at breaking and staying above 18,000, a level that has now become a bogey resistance for the big-cap index.
Now the DOW is effectively below its 200DSMA with the S&P only 4 points away from joining the DOW in a technically bearish market.
The Transports continue their lead in bearish territory, something its been telling us since the start of the year.
Similar divergent situations occurred in 2007, 2000 and in almost every year leading up to a major market crash. The Transports were well below their 200DSMA since May this year having completed a Death Cross above its 50DSMA on the 26th of May.
That was already an indication of more bearish things to come … and it has come.
The DOW now wears a Bearish Engulfing Pattern in monthly candle configuration and is sitting just a tick above its 50week moving average.
After Double Topping in March and May this year, it would seem that the DOW has now successfully been squeezed out of its Ascending Triangle and looks set for further downside.
The next support confluence will be between 17,300 and 17,100 if the current support at 17,600 fails to hold the price up.
A break below 17,100 is going to be a painful drop to around 16,500. I won’t be holding my breath for a miracle to happen neither am I going to wait for this market to get too painful before deciding what to do. I have already moved my interest to commodities as of the start of the year and it has already been a profitable migration. I will be keeping my money there while considering a few bearish option positions on this equity space.
Since the end of last year, I have been talking and writing about the possibilities within the commodity space. At the start of the year, copper went on a run as I mentioned it would in December.
As recently as last week while I was in K.L., I mentioned that I was waiting for a seasonal spike on wheat and sugar and possibly corn to happen toward the end of June. And guess what? … It has happened.
Many more opportunities are waiting to happen in this often-overlooked space in the financial markets.
On the macro front, America’s Inflation Rate remains deflated at -0.2% while its GDP Growth Rate is negative at 0.2% after a double contraction into negative – a technical recession – since the start of the year into June.
Industrial Production (-0.2%), Factory Orders (-0.4%), Durable Goods (-1.8%), NY Empire State Manufacturing Index (-1.98%) and various other production and manufacturing data all point to a weak American economy. The Housing Index, various home sales and mortgage data also point to a weak real estate situation while Personal Spending and Personal Income numbers also fall.
Outside of America, things look worse. China (above) fell of its parabolic perch and wiped out more than half its year’s gains in only three weeks.
Singapore’s market (above) isn’t faring that much better having fallen into negative for the year since the end of May and looks set to stay entrenched below 3,400 for the time being.
Housing prices (above, in general) are down to 2011 levels while salaries have not increased.
In Malaysia, the threat of an imploding 1MDB has sent the Ringgit down to 2.80 against the Singapore Dollar.
In 2010 and 2011, I mentioned in a previous report that if Malaysia didn’t tend to its debt woes with the utmost seriousness, this cancer will see the country go broke by 2015 and become a sovereign debt country, like Greece, by the year 2018.
So far, the prophetic view of that report seems to have hit the mark with uncanny accuracy. In March this year, when the Ringgit was at 2.65 against the SGD, I said that I wouldn’t be surprised to see it at 3.00 against the SGD by the end of 2015.
Even as I write this, the Ringgit continues to fall against the SGD. The Malaysians are really having a tough time of it if my recent visits to their deserted malls are saying anything about the state of their economy.
And the worst is yet to come.
July is the start of quarter three and is the best month in the worst quarter of the year. Having said that, it is also the most volatile month of the trading year. The three months of Q3 are extremely varied with July reputed to be the most volatile, August being the most bearish in the last 20-plus years with no reliable patterns and September, known famously for having the lowest volumes of any month and the most bearish of the calendar year over the last 80-plus years.
July 2015 has 22 full trading sessions and one public holiday (Friday on 3 July). July is known for its volatility with huge swings either way. It is also the start of the third earnings season of the year when companies are known to pull back on their guidance and become conservative about their outlooks.
- The first trading day of July is the most bullish having been up on the DOW 20 of the last 25
- The second day immediately becomes bearish
- Friday 3 July is a trading holiday ahead of Independence Day – Markets Closed
- Saturday 4 July 2015 is Independence Day
- The Monday after Independence Day is usually volatile
- The second week is usually bullish but can be volatile as earnings season begins
- The third week (Expiration Week) is prone to wild swings
- Monday of July Expiration Week has been bullish on the DOW 8 of the last 11
- July Expiration Friday is bearish with DOW going down 9 of the last 14
- The volatility from week three tends to carry into week four and gets worse
- The start of week four is reliably bearish
- The Friday of week four is bullish
- The last day of July is traditionally bullish but down on the NASDAQ 7 of the last 9
Key Economic Dates
- Wednesday 1 – ISM Manufacturing PMI
- Thursday 2 – Non Farm Payrolls, Unemployment Rate
- Monday 6 – ISM Non-Manufacturing PMI
- Tuesday 7 – Trade Balance, G8 Meeting
- Wednesday 8 – Fed Meeting Minutes
- Wednesday 15 – PPI, Fed Chair Janet Yellen Testifies
- Thursday 16 – Philly Fed Manufacturing Index, Fed Chair Janet Yellen Testifies
- Friday 17 – Building Permits, CPPI
- Tuesday 28 to Wednesday 29 – FOMC Meeting (2 days)
- Wednesday 29 – FOMC Fed Fund Rate Policy Statement at 2pm EST
- Thursday 30 – Advance GDP QonQ
- Crude finds support in late June/early July
- Nat Gas is good to go long around mid month till mid October
- Gold and Silver finds some strength in July till October
- Soya stays weak and tends to bottom in July
- Wheat maintains its seasonal strength
- Corn traditionally stays weak in July but is known to make sudden rallies depending on the weather
- Cocoa tops out and reverses down towards the end of July
- Coffee stays weak
- Sugar gets choppy because of harvests in Brazil and India
Stay on the safe side of the trade and remember that besides being in a market threatened by bears, we’re also heading toward August, September and October, traditionally the worst months of the year for the bulls. Be warned and Happy Hunting Always.
I did it! I finally did it after 23 years … I went on my second honeymoon! I won’t bore you with the details but those who want to read about what it meant to me can catch up with it by clicking the picture below.
Along with the usual sights and cuisine, this trip meant so much more not only because it was my second honeymoon but also because I visited Waterloo exactly a month before its 200th anniversary …
… stood where blood stained the ground at Flanders Fields, Ypres, Passchendaele and where LTC John McCrae wrote his famous poem … I got to visit Patton … and paid my respects to the 101stPIR at Bastogne.
I am finally living my dream of visiting all these amazing historical sites. It is truly awesome to be where all the action went down and realise how much sacrifice was made to give us the life we have today. I am so blessed to be able to do this and honoured to pay my respects to the many who laid down their lives for us.
Just to give you an idea of the many live that were lost, here’s a superb animated video of the numbers that made up the losses in WWII in both theatres of war …
Last year, it was Normandy on its 70th anniversary. This year was Belgium. Next stop, the Pacific.
On May 8, PTT77 got their final session of their nine-week Tutorial. It was a small batch but what they lacked in numbers, they made up in enthusiasm and energy.
After five gruelling sessions, the weekend batch of PTT78 finished their Tutorial on 29 May. This eager batch of traders really stretched my stamina, endurance and knowledge but it was all worth it and gratifying.
I want to wish each and every graduate all the best and much prosperity in the months and years to come. Welcome to our community! This is going to be a long and arduous journey but you are not alone in this. Happy Hunting!
And still the Doves stay resiliently firm on buying.
But what really scares me is the major divergence between the major indices and the Transports. While the S&P, NASDAQ and DOW have been (barely) in positive territory since mid-February, the Transports have been negative all year.
Its a simple fact – if the transports are weak, its only because the economy has slowed and there’s hardly anything to move anymore. You can’t have a healthy economy if your trucks, trains, freighters and planes aren’t busy.
June is the last month of Quarter Two and is a rather bearish month. Traditionally, this is more so if May had sold off. June 2015 has 22 trading sessions. There are no public or trading holidays in June.
- June starts out well with the first two days of the month being rather bullish
- The first day of June has been up on the DOW 19 of the last 26
- However, in 2008/2010 the first day has been bearish with 2011 and 2013 down -2.2%
- The first week of June ends very bearishly
- The second week is the exact opposite of the first – it starts bearish and ends very bullishly
- The Friday before expiration week is the most bullish day in June
- The Monday of Expiration Week has seen the DOW go down 10 of the last 17
- 17 June 2015 is FOMC Policy Day (14:00 EST)
- June Triple Witching Day (Expiration Friday) historically tends to be bearish but in recent years, it seems o have turned things around – DOW has been up 9 of the last 15
- The week after June Expiration has been down on the DOW 21 of the last 24
- Watch for Portfolio Pumping in the last week of Quarter 2 as fund managers illegally jack up the prices of their portfolio’s underperforming securities
- The last day of June has been bearish with the DOW going down 16 of the last 23 and down on NASDAQ for 6 of the last 9
- Crude’s strength tends to consolidate in June
- Nat Gas moves lower
- Gold stays weak
- Silver bottoms out
- Copper sees strength
- Soya tops out
- Corn continues to decline
- Wheat bottoms and turns up sharply in mid June
- Cocoa starts an uptrend
- Coffee continues its weakness
- Sugar finds a low and bounces into July
Things are really getting hot … and I am not just referring to the weather … and its looking like it will get worse. With bubbles all over the place – equities, properties, consumer prices, etc – it won’t take a lot to bring it all down like a house of cards.
Whatever happens, I am not going to discount the improbable.
Some time back, I made a posting on Facebook after the Liverpool vs Manchester United match and had a string of other comments that followed. Even my Mom got in on the action.
Followers of my postings on Facebook would have noticed that my Mom and I are rather tight and that we share a love for cooking, good food, humour and a host of other things including our foremost love for God.
This prompted several people to write me asking how come my family is so closely knitted from my Mom to me and me to my kids. My answer was;
Why is yours not?
I found it disconcerting that so many would ask such a thing when it should be the norm. To me, it was like asking, “Why did you slow to stop when the traffic light turned amber?”
Have we, as a society, become so dysfunctional that what is supposed to be normal is not normal anymore?
I believe we have. When once we were courteous and giving, today we are rude and selfish. When once we were conscientious and caring, today we really don’t give a f**k unless we have something to gain by it.
What have we become?
More importantly, WHY have we become like this?
Family values have eroded, no, they have totally lost their way. Respect for your elders no longer exists. Children used to be seen and not heard but now they make themselves heard more than their parents and use it as a weapon to gain what they want. Siblings who loved and cared for their parents in the past now have become bitter and vengeful rivals for their dying parents’ legacies.
Is it about the money? Did society breed all this hate in us? Did the nation’s growing wealth make us greedy and selfish? Has the government failed in raising its citizens right? Have we become so spoilt that its normal for Maria to haul boy-boy’s military full pack? Did we become so ignorant that we blindly trust our government to take care of us when we’re overspending on things we don’t need? Have we become so naive that face and pride precedes common sense?
Are we doing the right things because its the right thing to do?
Or have we mistaken what is actually wrong for normal?
As much as most of you would like to point a finger and blame rather than accept your own failure, the answer is not in the past or what could have been.
It about what we do now to shape the future.
I was raised on old-fashioned family values and I have raised my kids the same way;
- Little children should be seen and not heard
- In an adult conversation, children should only speak when spoken to
- Respect your elders
- I was raised to have good manners – “Please”, “Thank you”, Excuse me”, “No, thank you”, “May I … please”, etc.
- Think of and put others before yourself
- Make Home a special place where children will always feel safe and wanted (Their room should never be a place of punishment)
As they become teenagers;
- Be their best friend
- Groom them in social etiquette and behaviour
- Take an interest in their school matters, hobbies and pastimes
- Spend quality time as a family
- Teach them humility, frugality and graciousness
- Show them proper financial management
- Make Home a place where they are always welcome and loved (The house should not be a place of dread and remorse)
As they become young adults;
- Respect their goals and wishes
- Support and path them properly
- Make them responsible for their choices
- Let them take hard knocks but be there to catch them when they fall
- Allow them their freedom and prepare to let them go
- Leave a door open in case they need to come Home
Communication is key to healthy relationships. This is even more so in a family. Most grievances within a family can be attributed to a lack of communication and a lack of understanding. Family time is the best time to communicate. Mealtimes like lunch and dinner, whenever possible, should be done together at a proper dining setting (not in front of the TV). The table should be filled with conversations (not mobile coms and tablets). Conversations should be about the children’s interests and adult’s advice (not complaints, grumbles and quarrels). Everyone should have a chance to speak and everyone should listen to whomever is speaking (this is mutual respect). Such occasions always bring the family closer.
Have a fear for God in whatever name you call Him – this is called having a conscience. If you are not religious, then believe that there is always a greater force, a higher authority that will rule and judge us. It is imperative that the family is raised knowing the difference between good and bad. The parents must lead by example. Thus, if you’re going to be a parent or if you are already a parent and you have been shithed without realising it, don’t be surprised when your kids start behaving like you. If you ever ask, “what’s wrong with my kids?” or “why do my kids behave like that?”, all you have to do is look in the mirror for your answer. If you’re going to blame your spouse for that, look in the mirror again. Then get your spouse to do the same.
What goes around, comes around. This also means that if you raise your kids as spoilt, disrespectful and rude brats, you are going to be the biggest victim of what you sowed. These shitty kids will grow up and could care less about their parents (because that’s how they were raised). This is why so many young adults these days see their parents as burdens. Remember that if you expect your kids owe you a living, what are you doing for them today to build that credit?
Respect is earned, never an entitlement and certainly not a given. As parents, you earn the respect of your children by respecting them. By spoiling your child and allowing them to wail for whatever they want is disrespectful to you. When you give in to their demands, you are not earning their respect – you are just goading their greed. When they eventually learn that you can be taken advantage of, they will forever disrespect you because you don’t even have respect for yourself by giving in to someone else’s demands. Let the child know who’s boss. This starts at a very young age. Once they know you’re the boss, they will seek protection, comfort and love from you because you have earned their respect. They will trust you. They will seek your counsel. They will love you unconditionally. However, this does not mean to rule by fear. Fear breeds hate. And hate breeds separation. The child must know that behind every tough decision is a reason of love.
It may seem archaic and middle ages. Sometimes other kids think that my kids are uncool. But then, it did raise the question of how come my family is so tight. The fact that people of all ages are asking the same question proves that being a tight family is cool and having family values rock. Even my children’s peers are saying that my kids have a cool family.
The lamest excuse any parent can have for not doing these things is that they have no time. But there’s always time for the iPad and smartphones. I see that all the time – families out having dinner and everyone is on some electronic device instead of sharing a conversation and enjoying quality family time. Some parents even go to the extent of distracting the little one with the iPad so that they are not bothered by the child’s whims or cries for attention.
It all starts when they are old enough to see. That’s right. From the moment the child opens its eyes, they see and learn. Parents set the way the child will grow and learn. Thus the way your child behaves is a direct reflection of who you are as a parent. The sad fact is that such parents won’t take responsibility for the way their child has become and blame everything and anything else under the sun for their ill fortune for having such an ill mannered and badly behaved child.
Raise your child properly. You can be the biggest recipient of their upbringing or the biggest loser when karma comes knocking.
Although the market has been struggling to maintain a positive close above the year’s open, the $TRAN has been bearish almost all year. That is the sort of divergence that seasoned traders take special note of as the Transportation Index has been a reliable indicator of the economic health of the US economy.
This month, we break down the individual top components of the index to get an idea of what’s in store and if there are opportunities lying in wait if this market resumes its rally or when it comes down in the next correction.
Subscribers can download their copy here: Transports 2015
Did you see something flash by in a hurry? I swear it was April – it has come and gone in such a hurry. I don’t remember much of the month as it went by so quickly but I did post one major personal accomplishment that made me feel great to be over Fifty;
For the first time in 31 years, I managed 2.5km (50 laps, freestyle) in under an hour (57:54). On top of that, I kept my weight below 65kg since half a year ago and maintained a BMI of 23.45kg/m2.
For those not in the know, after being sick for so many years and having gone through four operations in three years between 2011 and 2014, it means a lot to me that I am fit and back in shape again. I have always maintained that wealth without health is meaningless. So to be able to walk the walk about the talk I talk really means the world to me. I hope that I can influence a few more people to make the effort to take care of themselves instead of wallowing in their “ill” fate that “life cruelly inflicted upon them”.
I’d rather be thankful for what I have. I make do with what ever has been dealt to me. I work at getting the most out of any situation I find myself in. I always look for opportunity in adversity. Then I pray for those who are also down and encourage those who have suffered similar fates.
Life is too short to get depressed or angry or sad about things that don’t work out. Use those energies and channel them into something useful.
I’ve noticed a massive pick up of Gurus in the market here in Singapore and Malaysia. The growing number of financial courses are more than I can remember since 2007. It seems that a lot of young traders have become massively successful in the last three to four years and are now preaching their style of trading and investing to inspire others to become “financially free” and become a “millionaire” and to live the life of their dreams.
I’ve said it before so I won’t bother to say it again. You can read it all here.
All I will say is that after more than nine years of teaching, I am still doing what I do while seeing so many others fall by the wayside. Some give up on the business because its tough and gets boring. Others fold because of scandals, suits and bad reputations. Most closed down because their students became jaded, disillusioned and eventually learnt the truth about what real trading is about … the hard way.
The ones that really lose out are the students who are now left without a teacher to guide them and support them anymore especially at a time when guidance and support is needed. Its just like Dr Alexander Elder said in his best-selling book, “Trading from a Living“;
A new market cycle guru emerges in almost every major stock market cycle, once every 4 years. A guru’s fame tends to last for 2 to 3 years. The reigning period of each guru coincides with a major bull market in the US.
“When the guru’s forecasts stop working public admiration turns to hatred.
“An old cycle guru never fully comes back. Once he stumbles, the adulation turns to derision and hatred. An expensive vase, once shattered, can never be fully restored.”
Those who survive aren’t really interested in teaching anymore as they get their underlings to teach on their behalf, some hire professional sales-people to sell it for them and the support is handed over to other underlings to manage. Most survivors aren’t even teaching what they taught more than four years ago because they’ve had to change their hype to be able to sell it and thus, change what they teach to match the hype.
I love to teach and I am hopelessly passionate about it. My longevity in this business is my testimonial. That I alone sell my class is proof of my dedication. I, more than anyone else in my community, support my graduates even after nine years. I create and innovate my own ideas and blaze a trail that every other competitor in the business has modelled and copied in one way or another.
I have what most Gurus don’t – a PASSION to do what I love and a HUNGER to teach those who want to learn. And that’s why I am still teaching after nine years and doing practically the same things since I started without having to hype it up. And I still do it with the same enthusiasm and dedication as I have done all these years … although the energy has waned a little since I am older now.
To the new Gurus who have emerged from the recent bull run, I wish you good luck and much prosperity. I also pray that you teach what’s right and put your students ahead of your own interests.
On the weekends of Friday 10 to Monday 13 and Friday 17 to Sunday 19 April, PTTMY29 got their Tutorial in Kuala Lumpur. Now they begin the task of putting it all into action during the eight-week Tutelage.
This was a small but energetic bunch and we had a lot of fun in our first Tutorial at our new facilities in Solaris, Mont Kiara.
Four months of trading and the market hardly sees much of a gain. The DOW close out the month with a 0.097% gain for the whole year while the S&P fared slightly better a +1.31% for the year.
On Thursday 23 April 2015, NASDAQ broke to 15-year highs, surpassing its Dot.com Bubble high close set in March 10, 2000. The tech-heavy index closed out the month with a modest gain but is still the best performing index with a +3.8% gain for the year.
All three benchmarks closed out the month below all their major moving averages (10, 20 and 50) while their 200DSMAs loom closer with each passing session.
The VIX seems to have completed a breakout from its Descending Triangle and looks set for more upside going into May. It briefly broke above its 200DSMA on Thursday 30 April before closing lower. It remains above its 10, 20 and 50 DSMAs.
What’s really becoming scary is the disconnect between equity flows and the major benchmarks. The flows out of equities is something not seen since 2009 before the market went negative for nine months in 2010.
Another major disconnect is the relationship between the Industrials and Transports. It is quite well documented that I am a believer of the Dow Transports and what I’ve been seeing this year tells me we’re in for some major volatility.
As of Thursday’s close, the Transports are now two days under its 200DSMA with a -5.98% loss YTD.
May 2015 has 20 trading sessions and one public holiday. May is notorious for having the year’s most fearsome correction. Some Mays in years past (most recently in 2012) are known to wipe out the whole year’s gain in a single month. May starts well but almost immediately goes into one of the most bearish weeks on the trading calendar.
- The first trading day of May has been up on the DOW 12 out of the last 17
- The first two days of May are the month’s most bullish days
- The next three days are the most bearish
- The second week of May tends to be more bearish than the first
- The Friday (8 May) before Mother’s Day (Sunday 10 May) has been up on the DOW 13 of the last 20
- Expiration week tends to be a little bullish
- The Monday (11 May) after Mother’s Day has been up on the DOW 15 of the last 20
- Monday (11 May) before May Expiration has seen the DOW gain 21 of the last 27
- May Expiration Friday (15 May) has been down on the DOW 14 of the last 25
- The week after Expiration Friday tends to be bearish
- Friday (22 May) before Memorial Day (Monday 25 May) has seen the DOW go down 8 of the last 14
- Monday 25 May is Memorial Day – Markets are closed
- The day after Memorial Day (Tuesday 26 May) has been up on the DOW 20 of the last 28
- The week following Memorial Day has been down on the DOW 11 of the last 18
- May tends to end well but has been down on the DOW 10 of the last 18
- Oil tops out in May and starts a downtrend
- Nat Gas also tops out but tends to consolidate in May
- Gold sees weakness
- Silver tends to peak and reverse in Mid May
- Copper usually makes a correction in the middle of the month
- Soya tends to peak and start declining
- Wheat continues its weakness
- Corn consolidates in a sideways fashion
- Cocoa also consolidates
- Coffee weakens
- Sugar consolidates at the lows
So we go into May without much to lose as there hasn’t been much to gain all year. Earnings continue to roll in and set a dovish tone about the last quarter while guidance has not been all that rosy going into the next. The market, meanwhile, struggles to anticipate the Fed’s next move as the economy doesn’t present a solid case to keep rates low. The bad news in the economy has been good news in the market but this can’t go on forever as the speculation dries up. The reality of the pain in the street will become more and more apparent and the greed in the market will cave in under this pressure.
All the while, life goes on – Oil makes its seasonal run and looks set to get up to $60p/b within the coming week, German Bunds continue to offer negative returns, Brazilian interest rates get up to 13.25%, the Arabs take it to the Yemenis, the public in Baltimore take it to the cops, Mother Nature takes it out on Nepal and on Saturday, 2 May, Pacquiao takes it to Mayweather.
Have a great Labour Day Long Weekend everyone!
“Riding The Rate” is my latest article featured in The Business Times’ BTInvest.
Read the full article here: http://einvesthub.btinvest.com.sg/markets/2015/04/13/riding-the-rate/
The month of April is the most bullish month of the trading year and marks the end of the “best six months on the Dow and S&P500”.
But the run will continue on the NASDAQ as tech issues usually run up the charts till June.
This month, we’re looking at the backbone of the tech sector from which all the magic is born – Semiconductors.
Subscribers can download their copy here: Semiconductors 2015
Busy, busy, busy … and when you couldn’t get busier, the Nation loses an icon and we have more to do albeit with a heavy heart.
On Tuesday 10 March, PTT76 completed their Tutorial after seven weeks.
On Friday 20, Malaysia got its first Gathering at our new training centre in Solaris Mont Kiara.
Then for the first time of my public speaking career, I was invited to give a talk about Success and Motivation at the SMART Investment and International Property Expo 2015 at Marina Bay Sands.
We went back to LifeLong Learning Institute on Sunday 29 for the Candlestick & Breakout Patterns Workshop.
More than 60 pax attended this session is it was a blast. We were even visited by Red Bull who handed out complimentary cans of the energy drink, not that we needed more energy – the Candlesticks workshop is always high in energy anyway … it always is because its my favourite workshop. But we were grateful for the refreshing break.
IN MEMORY OF …
Without doubt, the biggest event for any Singaporean in March 2015 was the passing of our country’s first Prime Minister, Mr Lee Kuan Yew at age 91 on Monday 23rd March on our 50th year of independence.
What followed was a very testing week and an emotionally draining time for the nation. He was finally put to rest on Sunday 29 March when even Mother Nature wept heavily at his departure.
As we close a chapter on this Island’s first 50 years of nation building that Mr Lee started and worked so hard to achieve, its now up to us to ensure we don’t screw up everything he made so good for us to inherit.
Thank you, Sir, for the legacy you have entrusted us to keep dear.
Rest well and peacefully, now and forever.
So AAPL finally gets into the Dow Jones Industrial Average. I suspect things are going to get real volatile now. Q1 has been a roller coaster for the US market, spending almost as much time in the red as in the black.
For the record;
- The DOW closed out the quarter at 17,776.12 losing 46.95 points (-0.3%), its first losing quarter since Q1 last year.
- The S&P500 ended the quarter at 2,067.89, gaining 0.4% and extending its winning streak to nine quarters in the process.
- The Nasdaq Composite finished at 4,900.88 (+3.5%) for the quarter. That makes it nine quarters in a row – its longest (quarterly) winning streak in its history.
March 2015 became the month the Fed “lost its patience” and made stronger implications of raising interest rates by mid 2015. The US economy also began revealing cracks in their “recovery” and began admitting that revenues haven’t been that stellar. Going into April 2015’s earning season, we’re getting shots fired across our bow screaming out profit warnings. Of the 500 S&P500 companies providing first-quarter outlooks, 84% have been negative.
Report from MarketWatch: Profit Warnings Piling Up
As of the close of 31 March 2015, 380 of the S&P500 companies wore PEs above 15 which means that 76% of the S&P500 is overbought.
The Dollar Index broke above 100 to set a multi-year high while Crude, Nat Gas, Gold and Copper wallowed at multi-year lows but looking likely to be breaking out of those lows in recent sessions.
Things are getting freakier in the markets and increasingly difficult to trade. Volatility is unusually high and volumes haven’t been encouraging. Caution is still the watch-word for now and I will be keeping my money in commodities more than any other security as we go into Q2.
April has been the most bullish month of the calendar year with an average gain of 1.9% since 1950. The last nine years were up, including 2008, with an average gain of 3.1%. April is the first month ever to have seen a 1000 point gain on the DOW in 1999.
This April 2015 has 21 trading days and one public holiday. It is the start of Quarter 2 and the beginning of Earnings Season for Q1 results. April is also the last of the “Best Six Months” on the DOW and S&P500.
- The first trading day of April is the most bullish of the month with the DOW up 16 of the last 20
- The day before Good Friday has been up on NASDAQ 14 straight years
- Friday 03 April is Good Friday – U.S. Markets will be closed.
- Non-Farm Payrolls will still be announced on Friday 03 April.
- The first four days of April make up the most bullish week of the month
- However, the day after Easter is the second worst post-holiday session
- The second week starts out weak but ends strongly
- The third week starts strongly and stays bullish
- The Monday before April Expiration has been up on the DOW for the 18 of the last 26 (down 5 of the last 10)
- April Expiration Friday has seen the DOW close up 14 of the last 18 (last year down)
- The fourth week starts well but is prone to weakness after mid-week
- Wednesday 29 April – FOMC Statement and Fed Fund Rate Policy Announcement
- April usually ends well
- Crude continues rallying into mid-May
- Nat Gas tops out in mid-to-late April
- Gold declines a little in April
- Silver also falls till the third week of April
- Copper strengthens and tops out at the end of April to early May
- Soya and Corn stay strong
- Wheat stays weak
- Cocoa’s decline from March continues into April and bottoms mid month
- Coffee stays strong
- Sugar remains weak
So we lay to rest the Man who made Singapore happen and now venture into a future he left for us to make our own.
Let’s pray and hope we don’t waste it all away by being selfish, complacent and ignorant. If the first 50 years under LKY brought us here, let’s make sure the next 50 takes us to a higher high and not regress and destroy all that he worked for.
I read this report that said that copper has lost its edge as a leading indicator. I think this report is rubbish. Firstly, one should never use correlations or divergence to trade or invest – that’s akin to gambling when there are safer, surer ways to make proper analyses without being so speculative.
This report misses the main point by a mile. It says that copper as an indicator has lost its way. But has it? It says that the US economy has been doing well as so have the markets. Have they? Really?
So while the US market continues to stay resilient and its data continues to imply that all is well, we ignore copper because its lost its shine?
In my opinion, most of America and its reporters have looked past one major possibility that copper is pointing to because they never had such a situation plague them in their history – Deflation. And this Deflation is currently in full force. The markets and the economy are lagging indicators.
Although they never admitted it, the US had been going through a minor Stagflationary period between 2010 and 2014 when their inflation keep rising while growth stayed stagnant (but in positive).
We can argue the validity of the market run – whether its really because the market is doing well versus buybacks, lower volumes and index manipulation.
We can also argue about the employment rate, GDP and economic data versus creative accounting and statistical manipulation.
But the one thing we can never discount is the force of actual Supply-And-Demand in the commodities space.
(With contributions by R.M.)
Here is the Continuous Commodity Index (broad commodity index).
While the dollar rally and the weakness across the energy patch are pressuring commodities, other drivers exist as well. One specific commodity to watch closely is lumber. Here’s the May-2015 lumber futures contract. It is an indication of slower US housing demand on higher rates ahead. The Canadian housing market is losing value.
This is a reflection of the raw materials prices in China: steel rebar (used in construction) and iron ore (May-2015 contract). The rebar weakness tells us not to expect a housing recovery in China this spring.
China’s recent growth downgrade is sending iron ore futures to multi-year lows.
While the focus has been on crude oil, a number of non-energy commodities are also in downtrends.
With the Fed’s expected rate hike in 2015 and further dollar strength widely expected, the global deflationary environment is pressuring commodities across the board.
It has been my assessment since Q3 2014, that the world (not just the US) is headed for another major downturn cycle. What Japan went through in the late 1990s has been replicated on a global scale in the last six years. If Japan’s history is going to repeat itself on a global scale, copper is definitely showing us how bad it will be.
For now, I am calling it a Great Deflation.