February 2015 Review, March Preview

February came and went so quickly that I am still writing my dates wrongly!

The only highlight for me was Chinese New Year and that’s about all I can remember. We had another one of our traditional gatherings at my place with more than 30 people making a ruckus and a mess. The lou hei was a little less messy this year but I still found remnants of the stuff under my sofa like two days later! And we only broke one wine glass this year.

Yes, we gambled as we always do … and I won’t tell you who the big winner was, as its always the same fella.

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For the record, it was also the first month in more than five years that I didn’t make a single trip up to KL or out of the country for that matter.

MARKET MATTERS

INDU

The S&P 500 gained to 5.5% while the Nasdaq Composite climbed 7.1% since the end of January. Year-to-date, the DOW is up 1.7%, NASDAQ is +4.8% and the S&P500 is up 2.2%.

Now comes the confusing part of the analysis – we are entering the most bullish two consecutive months of the trading year against a backdrop of global economic weakness. The US, for its own part, is doing well and improving its economic health. Other factors to consider coming out of February;

However, the rest of the world seems to go from one crisis to another;

All we can do now is keep our trading positions quick and easy without holding anything for too long a period, whether long or short.

The US market volatility should settle down now that earnings season is over and become more rational. I will be keeping my trades on the seasonal side of things as I re-enter the equity space – I have been trading equities modestly but staying mostly sidelined since November – with a little more aggression in March and April.

The market is still nervous, make no mistake about that, thus tread on the side of caution and when possible, be hedged and taking nothing for granted regardless of the noise.

If the February run continues into March and April, there will be a lot of noise so keep a close eye on the market’s fundamentals and economic macros because I am not expecting any improvements even if the market doesn’t agree.

Barely two months after posting a frightening first deflation in five yearsthings in Singapore are not expected to improve any time soon either. The most recent warning has been the government’s pressure on Temasek Holdings to increase its short-term positions with more liquid assets – a clear sign that shifts the investing portfolio into a trading one as the government seeks to draw more funds for infrastructure needs.

With the global economies on the brink of a major deflationary cycle, it may seem like the prudent thing to do but with that prudence comes more risk especially when you consider that Temasek hasn’t been the sharpest knife (not by a long shot) in a drawer of failed short-term fund managers.

Much to think about …

MARCH PREVIEW

March 2015 has a total of 22 trading sessions. March is known as a bullish month especially towards the middle of the month. March starts well and can end poorly. It is the last month of the first quarter and is known for its December Low indicator where if the market closes above the low of the previous December, the year is likely to end higher and vice versa.

Recent years have seen a change in the end-of-quarter window dressing that used to rally the market in the last week. These days, March ends poorly especially since 2008 as fund managers’ participation in the equity space has dropped off significantly post Sub-prime.

March Trivia

Commodities

 SUMMARY

Now that Chinese New Year and the holiday seasons are all done and dusted, its time to get back to some serious trading. For the long-term investors, there isn’t much to shop around for unless you want to consider some real bargain-basement commodities such as Copper, Sugar and Oil – definitely worth a serious consideration if you have nothing else more undervalued that those.

Be safe and hedged in the equity space as it is arguable that we’re in the second largest asset bubble in history. If and when this bubble bursts, its will be a global fireworks display of epic proportions that will make the Sub-Prime look like a walk in the park.

Happy Hunting!

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