Beary Christmas & A Hawkish New Year!

So quickly time flies. Seems like only a few weeks ago that I posted the outlook for 2008 and here we are, in the last month of the last quarter after a historical year in the markets.


Originally Posted by Conrad on 01-21-2008, 09:39 PM

The first five days of the trading year have an uncanny record as a leading indicator for the month and year to come. This is especially so on Election Years when the first 5 days were down … the year finished lower on a 100% record.

Thus, if the 5-day 672 point drop on the DOW is any indication, we’re likely to finish January 2008 to the down side. As it stands today, the DOW is already 1,162 points to the South. Any realistic chance of closing January to the upside will require the DOW to make up 142 points a day for the next 8 days, without a loss. Not going to happen.

Its a pity the forum got slammed because at the start of October last year, this is exactly what I said was going to happen. Going back further (in my old forum) I mentioned that the end of 2007 was going to be soft and this softness would carry into the middle of 2008. The longer term future, if you think all this is bad news, is that we are going to be soft for the long term … how long? I suspect till 2010. Any sort of recovery will probably be around early to mid 2011 to early 2012.

Back in the end of 2006, good old Greenspan warned us that we would end up exactly the way we are right now. The IYCs at the start of 2006 and 2007 have been absolutely reliable indicators in the past and how have proved themselves again. Yet the write-ups we read would have us believe that the worse is not as bad as it seems. In truth, who would dare to sell fear when the after-effect is that no one will buy anything … or worse, sell what they have in the financial markets? Old Greenie with his big ‘uns!

Personally, as always, I care little for the direction of the market as any direction is an opportunity to me. But I do care for the friends who have jobs on the line as the markets gets softer and softer. Reading into these daily news reports gives one a false sense of hope in retaining their rice bowls. While assurances are shoveled out in bucket-loads, the obvious fact is that what happens in the States is echoing around the world, regardless of what local writers say … take Citi Group and Merril Lynch’s employment cut backs for example.

I’m just happy to have the happiest forum on the block where traders are making money, regardless of what the market does. Sure there are losing trades but the big picture is very encouraging. Which is more than I can say for the other forums where I see nothing but bleeding. I truly wish them well and hope they overcome their losses. Its never a good thing seeing a fellow trader going down. So if you’re reading this, please trade safely and wisely.

Do you realize that this was written during a time when everybody was hunky-dory and thought that I was nuts to be such a bear? This was during a time when I was telling people to be careful with Lehman Mini Bonds and Pinnacle Notes because they could lose everything and I got slammed for being nuts because they were such established banks. This was a time when I told everyone that jobs are going to be a premium by the end of the year and everyone said “it won’t happen to me”. A time when I said that buying properties is a bad idea and that prices will stall and retreat and I got rubbished for being kia-su. A time when I said the DOW will tank to further record levels when it was at 12,100 points and everybody else was calling that a bottom.

11 months, -3,270 points and -27% later, vindication is a sweet thing!

In August …


Originally Posted by From on August 17, 2008

I am keeping things simple and only looking at about 6 months down the road.

Here it is; Dow to hit 9,500 on the low or 11,150 on the high before End April 2009. Support is likely to be 9,500 to 9,800 while Resistance won’t get any higher than 11,150 to 11,500. That means a best case scenario is a sideway trend for the next 8 to 9 months. In a better case scenario, a volatile downtrend till April.

When I said that, DOW was at 11,660 and again people thought I was nuts while others called a bottom at 11,000. But this time, some started believing me. And by the 8th of October, we were below 9,500 and stayed below that since.

In October …


Originally Posted by Conrad on 10-13-2008

It’s going to drag on sideways in this going-to-be-familiar range of 8,500 to 11,000 for about 24 months more, at the least. By the time we get out of this, the world and the financial markets are going to be a very different place and I will surely be teaching a different brand of investing and trading – this I am sure.

Resistance levels @ 9,210 and 9,450
Support levels @ 8,240 and 8,000 (Remember that my low low support is 7,080)

Retrospect is a beautiful thing especially when you realize how acurate you’ve been. In an earlier post, I mentioned 7,080 as my lowest for the year with a soft support at 7,400/7,500. Only a week ago, we hit that and retraced for the biggest one week gain since the 1930s.


Originally Posted by From on November 21, 2008

Just a quick update after the close of 20 November 2009 …
Looks like we’re on the way down to 6,000. The way the market is deteriorating, I reckon we’ll see DOW break my 7,080 before Christmas. Of course the market will rally a little as more bargain hunters come in today, especially since November Expiration Friday is traditionally a bullish day. But I won’t be holding my breath for any upside further than my 11 year Historical retracement of 8,000. The best that can happen is to range along the 8,000 level till Christmas.

About the only thing I mis-cued was my Sep call for $200 oil. What a nut! That proves that you should stick to what you know and I know the DOW.

So where does this leave us as we go into the last month of the year after a super bearish year?

Remember that Santa gave Wall Street a miss in ’06 and ’07? Will he make a surprise appearance this year? I doubt it.

The overall picture for the market is still sucky and it’s not going to get better anytime soon. This Friday, we’re expecting the worse numbers in history for the Non-Farm Payrolls. The day before, Europe and Britain will be looking for rate cuts. And before all that, we have a slew of data including Construction numbers, ADP employment data and Auto sales numbers from a dying industry. It’s an obvious downside environment but what will make it scary is the unexpected Dead Cat as bargain hunters again call a bottom with each lower tank like we had last week and in the last week of October. Let’s not deny ourselves the fact that we’re still making lower highs and lower lows – each rally this year has failed to break a higher high and DOW is way below the 200DSMA, lower than it has ever been all year.

So in summary, DOW for 6,000 on the low between now and May 2009 and daylight will not get much brighter than 9,500. A break above 9,500 might just give us a return of Santa but I won’t be holding my breath.

So while shoppers hit the malls and others rush out to buy cars, I will remain conservative with my wallet. I expect things to get worse. As mentioned in a recent posting in my blog, the Singapore economy will take a big hit, I don’t care what the papers are reporting. Car owners will be hard hit, construction will burn and financials will hurt. Unemployment will rise, foreign workers will depart, rentals will fall, property prices will tank and I will go shopping for a new house.

But till then, stay safe, trade wisely and spare a thought for the Unfortunates this Christmas.


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