Comments Off on Sector Report 1703 : Undervalued S&P Big Caps 2017

Sector Report 1703 : Undervalued S&P Big Caps 2017

 

With the market being so overbought and yet still so enthusiastic about making new highs, I thought it was worth an exercise to see if there are any big cap stocks that are still undervalued.
 
To my surprise, a search amongst the S&P500 turned up some familiar names and in sectors that you’d assume were in a huge bubble. And most of these are good to go in the bullish month of April.
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Comments Off on March 2017 Review, April Preview

March 2017 Review, April Preview

March came and went so quickly that its tough to fathom that so much happened in that time. I have been busy, busy, busy so much so I honestly thought the Academy Awards Best Picture cock-up was in March when it was on the 27 of Feb instead – that’s how fast time has flown for me.

About all I can remember is having meeting after meeting, attending a 80’s style dinner-and-dance …

IMG_4989

IMG_4987

… starting the third Commodities & Futures Workshop on the 10th and wrapping it up on the 14th ..

Fut1

Fut2

… doing a public talk on the 26th …

SMART1

SMART2

… and starting a Tutelage Batch on the 13th which I am wrapping up tonight.

In between there somewhere, Ferrari won their first race in yonks and finally look good for taking the challenge to the Silver Arrows, Liverpool had a great March by destroying Arsenal, taking revenge on Burnley, holding Manchester City away and took Everton apart for Jurgen Klopp’s third derby win since he took charge (that’s a heck of a record) and Janet Yellen raised the Fed Fund Rate to 0.75% to 1.00% … finally.

And it is not over yet … the madness and busyness is going to carry into April. But I am not complaining! I am loving it!!

MARKET UPDATE

March closed in a loss, its first lower month since October last year. March has typically been a bullish month. Even in 2008, March closed as a Doji. However, March 2015 and 2017 have been bearish which is unusual. We’re going to find out if it means anything in the coming months as there are clear and present dangers already warning us to take the side of caution.

Screen Shot 2017-04-03 at 11.42.50 AM

Also, the DOW has done something not seen in two decades – four consecutive DFDMs (Down Friday, Down Monday) – usually indicating market tops and bottoms … and we’re definitely not at a bottom. The S&P500 is currently on two consecutive DFDMs. If the benchmarks go down on the first trading day of April 2017, the DOW will have an unprecedented five consecutive DFDMs with the S&P making the hat-trick.

PEratiosFor about two weeks in March, the US market was arguably in the biggest bubble in stock market history, surpassing even the 1929 bubble.

As of Friday’s close, the S&P500 has 368 (73.6%) companies above the PE of 15. 280 (56%) of them have Pes above 20.

At the start of the month, the percentage of companies above 15 was close to 80%.

In spite of the down month, the major indices are still yielding more than 5% year-to-date;

After falling into the red for the year, the Russell 2000 managed to fight its way back into the black, barely closing out the month with a gain and +2.1% YTD.

RUT

Such weakness amongst the mid-caps and small-caps usually accompany an overbought market and should not come as a surprise. Like the Transports ($TRAN/$DJT), these hardworking companies are struggling in the current economy.

Such divergences amongst the major indices are foreboding signs of a bear market ahead.

APRIL PREVIEW

April has been the most bullish month of the calendar year with an average gain of 1.9% since 1950. The last eleven 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 2017 has 19 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.
SeasonalsApril Trivia

Key Economic Dates

Mon 03 Apr

Tue 04 Apr

Wed 05 Apr

Thu 06 Apr

Fri 07 Apr

Tue 11 Apr

Wed 12 Apr

Thu 13 Apr

Fri 14 Apr (US Markets Closed)

Mon 17 Apr

Tue 18 Apr

Wed 19 Apr

Thu 20 Apr

Fri 21 Apr

Sat 22 Apr

Sun 23 Apr

Mon 24 Apr

Tue 25 Apr

Wed 26 Apr

Thu 27 Apr

Fri 28 Apr

Commodities

SUMMARY

So the bubble brews on and the world holds its breath for the next big drop. Will it happen in April, historically the most bullish month of the year? I am tempted to say “not likely” but then, we all know about famous last words, don’t we.

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Comments Off on CANDLESTICK & BREAKOUT PATTERNS WORKSHOP (K.L.)

CANDLESTICK & BREAKOUT PATTERNS WORKSHOP (K.L.)

CS

Don’t miss this upcoming …

7-HOUR CANDLESTICK &
BREAKOUT PATTERNS WORKSHOP

Next Workshop in Kuala Lumpur, Malaysia will be:
Sunday 09 April, 2017 from 09:30am to 17:00pm
(Tutorial Preview on Saturday 08 April at 2pm)

Public Admission Fee: RM250
Pattern Trader Graduates: F.O.C.

VENUE:
PJ Trade Centre, B-07-02
(8, Jalan PJU 8/8A, Damansara Perdana, 47820 PJ)
The iSpace Venue @ Chicago Training Room

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

Reserve your seat for the next session now!

For bookings, costs and queries, Drop an email to:

ptradermy@akltg.com (For classes in Malaysia)

*LIMITED SEATS, SO BOOK EARLY!!

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Comments Off on Weekly Market Update – 27 March 2017 BMO

Weekly Market Update – 27 March 2017 BMO

DOWFri24Close

Investors who have gotten accustomed to a steady string of gains in the stock market were taken aback by this week’s action, which sent the S&P 500 lower by 1.4%. This marked the fourth weekly decline of 2017 and was the largest weekly drop since early November.

The week got off to an unassuming start as Monday’s action was confined to a narrow range. There was no noteworthy earnings or economic news to digest, and the impending House vote on the plan to repeal and replace the Affordable Care Act led to caution among participants.

That caution turned into outright selling on Tuesday, sending the S&P 500 lower by 1.2%. A number of factors were cited for the decline, but the day’s selling was most aggressive in the financial sector as the SPDR S&P Bank ETF (KBE) fell 4.8%. The industry group stumbled as the yield curve continued flattening in a manner that contradicts the pro-growth narrative that accompanied the stock market on its charge to a fresh record.

Furthermore, the prospect of health care reform making its way through the legislative process dimmed as the week went on. The House of Representatives was scheduled to take part in a Thursday vote, but that vote got put on hold and cancelled on Friday afternoon due to a lack of support. Investors are acutely aware that a delay in passing health care reform means that tax reform will also need to wait.

Although the week was quiet on the economic front, it is worth noting that February Existing Home Sales (5.48 million; consensus 5.54 million) missed estimates while February New Home Sales (592K; consensus 560K) and February Durable Orders (+1.7%; consensus 1.3%) were better than expected. The Durable Orders report caused the Atlanta Fed to nudge its GDPNowcast for the first quarter up to 1.0% from 0.9%. To be fair, excluding transportation, Durable Orders (+0.4%; consensus 0.7%) came up shy of estimates, indicating relatively weak business spending.

Taking a look at rate hike expectations, the fed funds futures market spent the week pointing to a 50.0%+ likelihood of a June hike, but that implied probability dropped to 49.6% on Friday afternoon after the news of the health care vote being pulled made the rounds. One week ago, the fed funds futures market showed a 58.3% implied probability of a hike in June.

The major averages opened Friday with modest gains as investors were cautiously optimistic that the American Health Care Act would pass in the House. However, that positive sentiment faded as the day wore on and reports from Washington indicated that the GOP still hadn’t acquired the necessary votes. In the end, the health care bill was pulled from consideration and the major averages finished mixed. The S&P 500 (-0.1%) settled just below its unchanged mark while the Dow (-0.3%) and the Nasdaq (+0.2%) closed on opposite sides of the benchmark index.

The Russell 2000 closed out the week in the red YTD for the second time this year.

(Excerpts from Briefing.com)

Bonds yields fell yet again for another week, flattening the curve taking as the longer term maturities saw a flight to safety for most of the week.

Commodities saw Energy closed lower, Precious closed higher while Agri closed lower for the third straight week.

Agriculture Closing Prices

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Screen Shot 2017-03-26 at 9.33.27 PMTHE WEEK AHEAD

Monday 27 to Friday 31 March (Week 13)

The thirteenth week of 2017 (wk13) is bullish for the DIA and SPY with 80% over 5 and 10 year averages and more than 60% over 15 years.

The 2017 Stock Trader’s Almanac’s averages are more bearish:

Screen Shot 2017-03-26 at 10.54.21 PM

Key Economic Dates

Mon 27 Mar

Tue 28 Mar

Wed 29 Mar

Thu 30 Mar

Fri 31 Mar

SUMMARY

It is interesting to note that the seasonal model for the coming week is rather bullish whereas the Almanac’s stats are bearish. Maybe when you consider the Almanac’s stats are based on 21 years of data, you’ll see how the 15 year seasonal model makes sense. The 5 and 10 are the most recent years’ performance and given the bullish nature over the last eight years, it shouldn’t come as surprise that the stats for the 5 and 10 are 80% for the bulls.

So is the final week of March 2017 going to be bullish or bearish? Traditionally, The last week of Q1 should see a modest amount of Window Dressing that should rally the market. However, after last week’s fear factors, it might take quite a bit of convincing that this is going to be a bullish week. With earnings season two weeks away, I reckon not many will be ready to chance it and the stats quo should prevail. In a worst case, it should be a wild week where economic numbers will rock and roll the markets further south.

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Smart Expo 2017

SG17B2C_edm_Speaker10_01-2

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Comments Off on Weekly Market Update – 20 March 2017 BMO

Weekly Market Update – 20 March 2017 BMO

Screen Shot 2017-03-19 at 8.11.03 AM

After snapping a streak of six consecutive weekly gains, the stock market returned to its winning ways. The S&P 500 added 0.2% for the week, but did not overtake its record high from the start of March, which may count as a loss for investors starved for more. The tech-heavy Nasdaq (+0.7%) outperformed, climbing near its early-March high to flirt with another record close. The index is now up 9.6% for the year while the S&P 500 has climbed 6.2%.

The first two days of the trading week were highlighted by reduced trading volume as the East Coast braced for a winter storm. In addition, the looming FOMC rate decision contributed to reduced activity. Although overall trading volume on Monday and Tuesday was down about 15% from average, activity on the M&A front was alive and well, as Intel (INTC) agreed to acquire Mobileye(MBLY) for $15.30 billion in cash, paying a 34.0% premium to Mobileye’s share price from the previous session.

On Wednesday, the Federal Open Market Committee raised the federal funds target range by 25 basis points to 0.75%-1.00%. This move was widely-expected going into the day of the announcement, but investors were somewhat surprised to see the Fed maintain its measured outlook. The central bank nudged up its median target rate for the end of 2019 to 3.0% from 2.9%, but left its long-run target unchanged at 3.0%.

It is worth noting that the Fed tightened policy at a time when growth forecasts have shifted lower. The Federal Reserve Bank of Atlanta now expects that first quarter GDP will be up only 0.9% after calling for growth of more than 3.0% at the start of February. To be fair, first quarter GDP readings have a known tendency to underperform the remaining three quarters. For her part, Fed Chair Janet Yellen said, “GDP is a pretty noisy indicator”, adding that the central bank expects growth to average 2.0% over the course of 2017.

With the March hike in the books, the market’s expectations are now in line with FOMC projections for two more hikes before the end of the year. The fed funds futures market sees almost no chance of a hike in May (6.4%), but is starting to price in a rate raise for June (58.3%). Looking at the remainder of the year, the fed funds futures market sees a pause into the second half, currently expected to conclude in December when the range should be boosted to 1.25%-1.50%.

On Friday, defying the spirit of St. Patrick’s Day, the major averages failed to turn shamrock green, closing just a ‘wee bit’ below their flat lines. The Nasdaq finished flat while the S&P 500 and the Dow closed with losses of 0.1% apiece.

(Excerpts from Briefing.com)

Friday saw a handful of economic reports, including February Industrial Production, February Leading Indicators, and the University of Michigan Consumer Sentiment Index for March, but their influence was minimal:

Investors will not receive any economic data on Monday.

Bonds yields fell for the week with the belly of the curve taking most of the decline. Yields still remain higher for the month and higher YTD as well.

Treasuries Rally to Close Week on Strong Note

Commodities saw Energy and Metal prices close higher while Agri mostly closed lower for the week.

Agriculture Closing Prices

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Screen Shot 2017-03-19 at 8.18.23 AMTHE WEEK AHEAD

Monday 20 to Friday 24 March (Week 12)

The twelfth week of 2017 (wk12) is mixed for the DIA and SPY with varied averages over all three time averages (5, 10 and 15 years) but does have a slightly bearish bias over recent years.

The 2017 Stock Trader’s Almanac’s averages the DOW and S&P500:

Screen Shot 2017-03-19 at 9.37.36 AM

Key Economic Dates

Mon 20 Mar

Tue 21 Mar

Wed 22 Mar

Thu 23 Mar

Fri 24 Mar

SINGAPORE: Jobless Rate Confirmed At 6-Year High In Q4

Singapore’s seasonally adjusted unemployment rate rose to 2.2 percent in the fourth quarter of 2016 from 2.1 percent in the previous two quarters and in line with preliminary estimates. It was the highest jobless rate since the December quarter 2010, as more people entered the labour force while layoff went up the most since the June quarter 2009.

In the three months to December, the jobless rate for residents were up to 3.2 percent (from 2.9 percent in the third quarter) and the rate for citizens also increased to 3.5 percent (from 3.0 percent). Some 5,440 workers were laid off, up from 4,220 workers in the September quarter and was the highest since Q2 2009 (5,980).

The rate of re-entry among residents made redundant rose for the second straight quarter. About 52 percent of residents made redundant in the third quarter of 2016 secured employment by December 2016, up from 49 percent from the previous quarter.Job vacancies decreased to 44,500 (from 53,800 in the September quarter) and was also lower compared to the same period a year earlier (50,600). Reflecting seasonal hiring for year-end festivities, total employment grew in the fourth quarter of 2016 (2,300), compared to a contraction in the prior quarter (-2,700), but growth was lower than the fourth quarter 2015 (16,100).

For full 2016, the annual average unemployment rate increased to 2.1 percent from 1.9 percent in 2015. It was the highest annual jobless rate since 2010. Unemployment among resident went up to 3.0 percent (from 2.8 percent in 2015) while those among citizens went up to 3.1 percent (from 2.9 percent). The increase was broad based across most age and education groups.

Total employment in 2016 increased by 8,600, the lowest growth since 2003 (-11,700).

Source: Ministry of Manpower

SUMMARY

Through 2016 and going back to end 2014, I mentioned in my posts and public talks that I expected a long-term slow-down in the coming years as opposed to a market crash. I didn’t expected major gyrations in the markets but I did expect economic numbers to decline and contract at a gradual pace. 

This meant that any sort of recession or slow down was going to hit the economy more than the market and that the general population would hurt more than those in the markets. Crash-type recessions tend to hurt the market players more than the general population (in most cases).

My greatest fear at that time regarding long-term slowdowns was that the majority of the working population were not aware of the significance or threats of such slow economic climates as the last one was in the 70’s through to the early 80’s. Since then, every recession has been a quick crash-styled downturn that came back relatively quickly. On the Little Red Dot, the three-year Dot.com decline between 2000 and 2003 and the full effects of the Sub-Prime in the U.S. were hardly felt at all. This only served to put us deeper in denial of what a real slow down means.

As of writing this, I am vindicated. But it doesn’t please me to be.

These days, slowly but surely, more and more are starting to realise what this all means. The malls continue to empty out, big name retailers/restaurants are cutting back on their branches and lowering inventories, Consumer Spending slowed over the past year and Households Debt rose to an all time high of 62.10% of GDP in the third quarter of 2016. The luxury cars have been accumulating at the second-hand lots as many begin to default on their payments. Property prices had fallen for 13 straight quarters and it remains to be seen if this one-month rise in real estate prices has a rebounding effect.

The frightening fact is that the pain may not yet be fully manifested as people flocked to buy properties upon the easing of some measures and snapped up cars as soon as COEs made a modest dip. Landlords also remain stubborn to their high yield demands, preferring to keep their properties vacant than yield less.

Such behaviour is not that of an economy in full recession yet. It could be because some have made a wealthy harvest over the last seven years and are good for it … for now. However, the rate of borrowing, spending and savings amongst the general population of the Little Red Dot are not in-line with the behaviour of a truly healthy economy.

I reckon that we’re looking good on the surface but deep down inside, we’re hurting but we’re not going to let the other guy know about our pain. For some, that pain is already obvious and showing clearly. Until that pain surfaces so clearly that the government acknowledges it, we’re going to drag this slow-down out for a long time more.

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Comments Off on Weekly Market Update – 12 March 2017 BMO

Weekly Market Update – 12 March 2017 BMO

NOTICE: Monday 13 March 2017, US markets will open at 21:30 (9:30pm) (SG).

Screen Shot 2017-03-12 at 7.55.36 AM

U.S. Benchmark Indices – Mon 6 to Fri 10 March, 2017

A rate hike at next week’s FOMC meeting appears to be a mere formality following the better than expected Employment Situation Report for February, which crossed the wires early Friday morning. That seemed to be alright with investors as they pushed the major averages higher to finish a slightly disappointing week on a positive note. For the week, the benchmark S&P 500 lost 0.4%.

After posting six consecutive weekly gains, the stock market saw its third weekly decline of 2017. However, just like the other two weekly downticks, this week’s retreat was minor. The S&P 500 shed 0.4%, narrowing its first quarter gain to 6.0%.

The trading week started on an unassuming note with stocks showing limited reaction to a proposal put forth by House Republicans to replace the Affordable Care Act. President Donald Trump spoke favorably about the proposal, but Republicans in Congress have yet to fully support the effort, which has led to concerns that slow progress on the health care front would stymie corporate and personal tax reform, which the market has been anxiously awaiting.

Equity indices inched lower through the first three days of the week, but on Wednesday, it was crude oil that stole the attention, falling more than 5.0% to a fresh 2017 low near $50.30/bbl. The energy component snapped out of a five-point range that has held since the start of the year, responding to the news of yet another significant inventory build. Crude’s retreat continued over the next two days, leaving the energy component near $48.50/bbl at the end of the week. Oil lost more than 9.0% during the week while the energy sector surrendered 2.6% since last Friday.

There wasn’t much change on the central bank front as Wednesday came and went without any major surprises from the European Central Bank. The ECB made no changes to policy and did not hint at impending tightening even though the 2017 GDP growth forecast for the Eurozone was nudged up to 1.8% from 1.7%. It is worth noting that reports that circulated on Friday suggested the ECB may begin raising rates prior to the end of its asset purchase program. The news coincided with comments from Bundesbank President Jens Weidmann, who said 2017 eurozone inflation is likely to be “far higher” than projected.

As for the Fed, the central bank is now widely expected to announce its next rate hike on March 15 after the Employment Situation report for February did not upset the overall economic picture. With the report showing the addition of 235,000 payrolls, headline expectations (Briefing.com consensus 188K) were beat handily while average hourly earnings increased an in-line 0.2%, bringing the year-over-year growth rate to 2.8%.

The CME Fed Watch Tool now assigns an implied probability of 93.0%, up from 88.6% on Thursday, to a rate hike at the March 14-15 FOMC meeting after the February jobs report showed that nonfarm payrolls increased by 235,000 (Briefing.com consensus 188,000) and average hourly earnings rose 0.2% (Briefing.com consensus +0.2%). The Federal Reserve will announce its decision on Wednesday at 2:00 pm ET.

(Excerpts from Briefing.com)

Employment Situation Report for February and the February Treasury Budget:

Treasury Budget Maintains Similar Deficit Line in February

The Treasury Budget for February showed a deficit of $192.0 billion versus a deficit of $192.6 billion for February 2016. The Treasury Budget data is not seasonally adjusted, so the February deficit cannot be compared to the $51.3 billion surplus registered in January. Total receipts in February were $171.7 billion while total outlays were $363.8 billion. Receipts were $2.6 billion more than receipts in February 2016. Total outlays were $0.32 billion less than the same period a year ago.

Bonds yields

Commodities were mostly lower for the week with Crude falling below $50. The Friday’s tumble left the energy component 8.8% lower. Wednesday’s bearish EIA inventory report, which showed record high U.S. inventories. WTI crude finished the Friday session at $48.49/bbl.

Agriculture Closing Prices

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Screen Shot 2017-03-12 at 8.29.43 PMTHE WEEK AHEAD

Monday 06 to Friday 10 March (Week 11)

The eleventh week of 2017 (wk11) is Bullish for the DIA and SPY with more than 80% over 5 years, more than 70% over 10 years and more than 60% over 15 years.

The 2017 Stock Trader’s Almanac’s averages the DOW and S&P500:

Screen Shot 2017-03-12 at 8.49.02 PM

 

 

 

 

 

Key Economic Dates

Tue 14 Mar

Wed 15 Mar

Thu 16 Mar

Fri 17 Mar

SUMMARY

Without doubt, I am long next week given the statistical advantage favouring the Bulls. But before we get too carried away with the long trades, let’s keep in mind that next week (wk12) has been bearish for the last five years. Thus, I will be booking profits before the weekend just in case.

Happy Hunting!

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Comments Off on Weekly Market Update – 06 March 2017 BMO

Weekly Market Update – 06 March 2017 BMO

indices

The stock market continued its relentless push higher, which resulted in the sixth consecutive weekly advance for the S&P 500 and the Dow Jones Industrial Average cruising past 21,000. The benchmark index gained 0.7% for the week, extending its first quarter advance to 6.4%. The Nasdaq underperformed during the week (+0.4%), but remains ahead so far in 2017 (+9.1%).

The first two days of the week were highlighted by sideways action as most participants sat on their hands ahead of President Donald Trump’s first address to Congress, which took place on Tuesday evening. There was some profit taking ahead of the evening address on Tuesday, but not only was the selling limited, it took place after a strong run in February that ended with the S&P 500 gaining 3.7% for the month.

Tuesday’s modest downtick was wiped out in short order as equity indices charged out of the gate on Wednesday, jumping to new record highs. The upbeat disposition was attributed to President Donald Trump’s address, which was free of surprises and deemed ‘presidential’ by pundits. President Trump reiterated his commitment to a $1 trillion infrastructure plan and made another mention of a big tax reform plan on the horizon. Details, however, remain to be seen.

However, it wasn’t all President Trump as investors received some positive news from the global economic front on Thursday. China’s Manufacturing PMI for February (51.6; expected 51.1) beat expectations while eurozone Manufacturing PMI (55.4; expected 55.5) ticked down slightly, but remained in expansion.

On the domestic data front, fourth quarter GDP was left unrevised at 1.9% in the second estimate, while more recent data like February Chicago PMI (57.4; Briefing.com consensus 53.0), February Consumer Confidence (114.8; Briefing.com consensus 111.5), and February ISM Index (57.7%; Briefing.com consensus 56.1%) beat expectations. That combination, and some hawkish comments from Fed officials, contributed to a notable shift in rate hike expectations.

The fed funds futures market ended the week showing a 79.9% implied probability of a rate hike in March, indicating a prevailing belief that the Federal Reserve is likely to raise the target range for the fed funds rate at its March 14-15 FOMC meeting. Fed Chair Yellen herself contributed to those increased expectations with a speech on Friday in which she indicated a further adjustment in the fed funds rate would likely be appropriate at the March meeting if the FOMC’s evaluation of matters concludes that employment and inflation are continuing to evolve in line with its expectations.

This week also featured the widely-hyped, and closely-followed, IPO of social media company Snap (SNAP) on Thursday. The IPO priced at $17, yet the stock snapped higher when it first opened for trading, hitting the $24.00 mark before closing the session at $24.48 and finishing the week at $27.08.

The major averages finished Friday’s session near their unchanged marks as investors digested the latest remarks from Fed Chair Janet Yellen. The Nasdaq (+0.2%) outperformed while the S&P 500 (+0.1%) finished with a slim gain. The Dow closed the day unchanged.

(Excerpts from Briefing.com)

The U.S. Dollar Index went down 0.79% to 101.34 today (but still 0.08 higher for the week) as FX traders “sell the fact” on Fed Chair Yellen’s indication that a March 15 rate hike is all but assured. The British pound, loonie, Aussie, and kiwi remain near one-month lows but the euro has held up admirably in the face of all of this week’s Fed hawkishness. The international economic data showed continued strength in the eurozone’s service sector but the U.K.’s disappointed. China and Russia also saw slower growth in their service sectors. Retail sales in the eurozone unexpectedly declined in January. Historically, the dollar has not performed well in the wake of Fed rate hikes as Treasury yields have tended to move lower. That is not a forecast but simply a word of caution

Bonds yields rose across the board for the week to match the volatile greed in the risk space as investors saw reasons to get out of safety.

Commodities were again divergent for the most part. In a reverse of the previous week, this week saw weakness in energy and precious while there was strength in copper.

Agriculture Closing Prices

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THE WEEK AHEAD

Screen Shot 2017-03-05 at 8.47.10 PMMonday 06 to Friday 10 March (Week 10)

The tenth week of 2017 (wk10) is flat for the SPY and DIA over the last 5 years but bullish over the last 10 and 15 years with an average 60% reliability.

The 2017 Stock Trader’s Almanac’s averages for the DOW are bearish on Monday (53%) and bullish for the rest of the week; Tuesday (62%), Wednesday (52%), Thursday (57%)  and Friday (62%)S&P500 is bullish all week Monday (52%), Tuesday (62%), Wednesday (57%), Thursday (52%) and Friday (52%).

Key Economic Dates

Mon 06 Mar

Tue 07 Mar

Wed 08 Mar

Thu 09 Mar

Fri 10 Mar

SUMMARY

With the DOW barely clinging on to 21,000, the coming week should see it struggle to hold above it as the week is historically uneventful and boring. I reckon the last five years’ bearish returns will hold true as the market takes a breather. Not surprising if it does as the week, void of other economic data, waits for the employment numbers on Wednesday and at the end of the week.

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Comments Off on Monthly Sector Report 1702 : Mid Cap Semi-Con 2017

Monthly Sector Report 1702 : Mid Cap Semi-Con 2017

 

main-board-89049_640

This month’s feature is mostly focused on Tech Mid Cap Semi-conductor companies as NASDAQ goes into its second half of its “Best Eight Months” (between November and June) and its seasonally best (bullish) period between March and June.

As usual, we also have the monthly market updates on the US and this month’s economic update on Singapore is massive!

Get yours here: Sector Report 1702 : Mid Cap Semi-Con 2017

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Comments Off on February 2017 In Review, March Preview

February 2017 In Review, March Preview

16177480_10154887962098665_2866602519072421706_o

February was a quick month with little activity on the Tutorial front apart from the usual weekly classes, February Gathering on Trading Psychology and a Candlestick & Breakout Patterns Workshop on Sat 25.  I find it amazing that the Candlestick Workshop has been running for 10 years now and it still delivers the same, if not better “wow” factor as it did ten years ago. Participants still get a kick and a joyous time learning about this old and tested technique that marries financial, risk and psychological management all at the same time. I love teaching it and it remains the most under-rated workshop in this region (mostly because the public thinks its a sales gimmick) even though it is a genuine extension of the Pattern Trader Tutorial.

FullSizeRender 2Then there was Chinese New Year and the usual gathering amongst friends. This year, I was too tied up to organise the usual get-together at my place so Ariane and Brian did the honours at their place. It was no less noisy and wild and guess who clean up the card game … again

Most of my time since the start of the year has been spent developing my plans and organising my life for after I’ve left AKLTG some time after May this year. Lots of meetings and tying up of loose ends and lots of administrative matters to attend to.

FullSizeRenderThe transition is more energy-draining that I had imagined and it didn’t help that most of the month was spent coughing and fighting a really stubborn flu bug. Because of that, I’ve not been able to keep up my usual fitness regime and have not been in the pool since December last year. I should really re-start my program before I get too out of shape.

And that’s the plan for March. Just hope the weather plays ball.

MARKET UPDATE

DOW1yr

This has been one of the most bullish Februarys in recent years when the month has been the flattest in market history. In the last three weeks alone, the major indices more than tripled their gains since the start of the year. Year-to-date (as of Fri 24 Feb close);

YieldsAnd this run looks to be able to continue in the coming two months as March and April are typically the year’s most bullish consecutive months in history.

However, whether this run is sustainable becomes the main question when there has been a huge divergence from the behaviour of bonds.

Yields have fallen in the same period that risk has risen suggesting a flight to safety in spite of rising risk.

DXYMeanwhile the dollar strengthened in February as more speculation of higher rates peppered the market. Although, the past week was very quiet on the economic front, investors did receive the most recent policy minutes from the Federal Open Market Committee.

The minutes acknowledged that a rate hike will be in order fairly soon, if incoming data on jobs and inflation remains in line with expectations, which seems highly likely.

We’ll find out between Wednesday 1 March and Friday 3 March when we get the numbers from the ADP Employment report, Initial Claims, Non-Farm Payrolls and Unemployment Rate, along with a host of Fed members making public appearances including Kaplan, Brainard, Evans, Fischer, Powell and FOMC Chair, Janet Yellen. That could shift market sentiment ahead of their FOMC meeting on Wed 15 Mar at 2pm (EST).

With economic numbers showing that America is indeed healthy and earnings returns showing that businesses are running well, there is little to worry about regarding life on the street.

PE SnP

The market, however, is bubbling yet again.

SINGAPORE

STI

The STI has made some nice gains YTD with more than a 7% gain for the year, something that hasn’t happened in more than half a decade.

SG GrowthThe GDP advanced an annualized 12.3% on quarter in the last three months of 2016, recovering from a 0.4 percent contraction in the previous quarter and above earlier estimates of 9.1 percent. It is the strongest growth rate since the first quarter of 2011, mainly due to a rebound in manufacturing.

This 12.3% growth highly contradicts what the streets of Singapore are implying when it seems we’re in the worst economic health since Q3 of 2010. Between Q3 2011 and Q2 2014, the economy was doing much better with less than 2% unemployment and high wages everywhere. Yet, growth never topped 11%.

SG UnemployThese days, many have been laid off, many others have had pay cuts and the malls are more vacant than they’ve been between Q3 2011 and Q2 2014.

It’s hard to fathom that an uptick in manufacturing could have such an impact on the numbers even as the manufacturing sector has been struggling on the import/export front.

The GDP number hasn’t yet factored a massive 12-point drop in Industrial Production m/m between December 2016 and January 2017 and a 20-point collapse in Manufacturing Production y/y.

SG Manu mmSG Manu yy

Properties continued their slump into its fourth year with 13 consecutive quarters of decline while Business Confidence in the Island State stayed negative for its sixth straight quarter.

SG Res

SG BizConfi

Whether that 12.3% growth number is sustainable now becomes the question because the numbers now are not encouraging for the outlook of the Red Dot’s current quarter. There is no way that 12% can be sustained (short of a miracle or creative accounting) and any pullback to single figures will be no less than a 2.3% contraction which could spell more woes for business and consumer confidence.

Screen Shot 2017-02-27 at 5.51.43 PMMARCH PREVIEW

March 2017 has a total of 23 trading sessions and one public holiday. 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

Key Economic Dates

Mon 27 Feb

Tue 28 Feb

Wed 01 Mar

Thu 02 Mar

Fri 03 Mar

Mon 06 Mar

Tue 07 Mar

Wed 08 Mar

Thu 09 Mar

Fri 10 Mar

Tue 14 Mar

Wed 15 Mar

Thu 16 Mar

Fri 17 Mar

Mon 20 Mar

Tue 21 Mar

Wed 22 Mar

Thu 23 Mar

Fri 24 Mar

Mon 27 Mar

Tue 28 Mar

Wed 29 Mar

Thu 30 Mar

Fri 31 Mar

Commodities

SUMMARY

As Asia struggles with contracting growth (except for Singapore), the U.S. struggles to contain a bubble. These are interesting times and at the same time, daunting. I grow more cautious with each passing session.

Safe Hunting, everyone.

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