What a month! Really. Election rhetoric, GDP drama, earnings shocks and surprises, bleak outlooks and even a historical hurricane to boot! Life as a trader doesn’t get any more exciting than this.
October for me saw a pick up in demand for the Tutorial and this has gotten my calendar for the remaining months of the year rather packed. This coming weekend will see the start of another batch in Singapore while I am already running the weekly version and another batch that hasn’t completed the tutorial in K.L.
On the weekend of 5 to 8 October, Malaysia had their 20th batch of traders. This is only the start for them … now its eight weeks under Gary and three more sessions with me in the coming months. Keep up the energy people!!
Between all those batches there was a Candlestick & Breakout Patterns Workshop in Singapore and a Coach’s Training Workshop for my trainers and coaches in Singapore.
Malaysia will get their Coach’s Training Workshop in December and I am so looking forward to starting with them in K.L.
The month of October lived up to its reputation of being volatile, unpredictable and frighteningly bearish. The month also saw Singapore “escape” recession thanks to some creative accounting and saw America improve on its growth. However, earnings in America are starting to reveal some very scary outlooks and the coming months are going to be … challenging … and that’s putting it mildly.
The drama even extended to the market being closed for two days on the 83rd anniversary of the 1929 Crash as a result of the worst storm to hit the eastern sea-board since last year’s Hurricane Irene, to the “Perfect Storm” of 1991, even the Long Island Express of 1938. Hurricane Sandy made for a perfect Halloween scare as businesses shut down and transportation ground to a halt in the business capital of the world.
Market players have had a punishing time with ranges that went from flat to +/- 2% in a matter of days. There were even days when the indices were showing a sizable loss but the broader market was bullish. Such is the nature of October as the October Effect’s low volumes play hell on the market in earnings season.
The DOW, S&P and NASDAQ topped out in October and started a downtrend. All the major key level supports were breached as well as some of the key moving averages.
The DOW closed below its 100DSMA and its 20DSMA has crossed below its 50DSMA – all bad news for the rally lovers. NASDAQ fared worse – it closed below its 200DSMA for the first time since June 1 this year. It was also its fifth consecutive session below its 100DSMA and below its critical and psychological 3,000 resistance. S&P’s 20DSMA has crossed below its 50DSMA but the broad-based index is still well above its 100 and 200 DSMAs and 12 points clear of its critical 1,400 support. With volumes returning, the benchmarks really need to pull up and do it fast before the bears assume total control of the situation – which I suspect, could be sooner rather than later.
For the record, DOW and S&P closed out October as a Fifth Candle Reversal and NASDAQ completed a Third Candle Reversal in a Bearish Engulfing Pattern.
Volumes have been returning but it’s not happening as fast as we would like it to happen. The low volume situation has been plaguing the markets around the world since June this year as investors sought out safety I fixed income, gold and properties. Yields are still generally on the low side suggesting that monies are still stuck in bonds and refusing to emerge.
Precious metals are due to start their seasonal run and this will prompt more money flow into safety which could further dampen the appetite for risk.
Keep in mind that we do have the elections in the coming week (6 November) and the Fiscal Cliff at the end of the year. Other dates to note are the end of earnings season in mid-November, the Black Friday/Cyber Monday weekend of 23 to 26 November, the FOMC meeting on 11 and 12 December, the Santa Claus Rally, the exceptionally low volumes period during the last two weeks of December and the two major holidays of Christmas and New Year.
This is going to be a very volatile period and I am expecting some exceptional ranges.
October 2012 has 20 trading days, one half-day session and a public holiday. November starts the best six months on the DOW and S&P and the best eight months on NASDAQ. It is also the first month in the best three consecutive months of the trading year. November is the second most bullish month of the year on S&P and DOW’s third most bullish month. This year, November’s key date has to be the Election Day on Tuesday 6th.
- The first trading day of November has been down 5 of the last 7
- The first week of November is reliably bullish
- Sunday 4th November, Daylight Saving Time ends
- The second week is rather flat and down
- Tuesday 6 November is Election Day
- Monday before November Expiration has seen the DOW go down 7 of the last 12
- The third week is mildly bullish
- The week before Thanksgiving has been up on the DOW 15 of the last 18
- November Expiration Day is bullish with the DOW up 7 of the last 9
- Thursday 22 November is Thanksgiving Day – Markets are closed
- Friday 23 November is a shortened trading day - Markets will close at 13:00 EST
- The day before and the day after Thanksgiving are very bullish with their combined losses being only 12 in the last 59 years
- November finishes well in its final week
- But the last day is very bearish with the S&P down 9 of the last 13
- Crude continues to be weak till December
- Nat Gas will depend on how temperatures drop during this period
- Gold starts strengthening in mid-month till January
- Silver also starts strengthening in mid-month
- Copper continues its weakness into January
- Soya tops out in November along with Wheat
- Corn continues to strength since October and should run through to early May
- Cocoa bottoms out in November and reverses into its seasonally most bullish period till March
- Coffee consolidates and Sugar tops out
After Sandy shut down the market for two days, October finally finished with a loss on its last day of trading and a loss for the month. I must confess that what I though would be a bullish last two months of the year is now a second though. A lot will be needed to bring back that faith as the market reels from shit-poor earnings and ever-weakening economic data. I truly wonder if the market has anything left or whether we witnessing the end to the denial and the start of that inevitable decline that has been long overdue.
On the brighter side of life, I am moving on to the next chapter of my life in the next two months – I’ve finally got the key to my new apartment.
It is a strange feeling thinking that I will be leaving my 3-room HDB flat where so much of my life has happened in the 12 years we’ve been living here. I will miss this little home of ours where my kids grew from pre-schoolers into teenagers, where I went from nothing to bankrupt to recovery, where my career changed from Producer to Videographer to On-Line Trader, where I started my teaching career with small classes in the living room, where I met Adam Khoo, where my life change so drastically for the better, where I learnt to manage wealth at a level I never dreamed would be possible and where I learnt the meaning of life, humility, prudence and discipline.
It’s something worth a blog post and I’ll probably write it up in the coming weeks. But the long and short of it is that I am happy to move on, happy to be able to move on and even happier that the family is happy to move on. This has been a good home, not just a house or a HDB flat … it has been home for 12 of the most eventful years of our lives.
And the good news is that it is still mine because I ain’t selling it. It’s much too valuable an asset to put a price value on it. I pray that our new home will be just as good or even better. I know it will be.