Building a short list

The signs are there ... stock markets are buildingup to a climax yet again. The VIX at all-time low, the stock indices approaching all-time highs, and Europe approaching a recession soon. It is time to get ready a list for shorting. There are several waysto do it.

1. Short the indices.

Key shorting candidates include Dow Jones Index, DAX and FTSE (since they are the centre of attention).


2. Short stocks

Facebook (alas, I should have shorted it in its 30s, but it was in a rising market at that time) and the local stocks who have outperformed on the STI. Will be compiling a list to short.

Question is: When to start shorting. According to my indicators, within the next few weeks.

Taking partial profit

I have taken part profit on Yanlord @ 1.34 and SembMar @ 5.02. Markets seems shaky and have lost
the will to go any further. Also putting a sell stop on Yanlord @ 1.29 to protect trading profits.

Still holding on to my long-term positions in  NOL, Wilmar and SembMar though.

*I bought Yanlord @ 1.22 and SembMar @ 4.43

How far will Yanlord go?

I bought Yanlord sometime in April as a play on the Chinese property market. In recent weeks, it has behaved spectacularly, rising from a low of 0.975 to last Friday's high of 1.35 (increase of almost 40%!). How much higher will it go?

According to the chart, it has broken out of a double bottom neckline at 1.10 and key resistance level at 1.20. Next resistance is at 1.40, then it will challenge its year high of 1.50. Now, this is the exciting part. If 1.50 can be broken convincingly, this counter could fly all the way to the sky. Go Yanlord go!

Dow crash by 120 points yesterday, so should I take profits quickly?

Is it time to sell? Dow Jones seems to reverse itself after running up consecutively for the past couple of weeks. Stock markets taking a breather or changing direction down again?

I still think I would stay a little longer in the markets for the reasons cited before:

1. Equity valuations are still attractive. According to Luke Richdale, client portfolio manager at JP Morgan, we are near 1.5 times P/B for emerging markets, and emerging markets historically made money for investors on a 12-month basis when the P/B hit 1.5. During such times, investors should see returns of 65% p.a.

2. There should be further rate cuts and policy action soon. In this regard, China is expected to benefit the most. In fact, Credit Suisse expects the Shanghai market to trade up to 2,800 in 12 months time. (Of course, this is for reference only)

3. Other markets are also expected to go higher from now onwards, as bad news are priced in (although road ahead will be rocky). We should eventually see  Hang Seng trade to 23,500 and STI at 3,300, according to Credit Suisse.

Of course, it would be very good if these projections indeed come true. For now though, I am on the side of bullish analysts. (But, things may change in the next few weeks).

I am glad I did not sell out during correction last month

It has been an exciting month - my trading portfolio actually swung from negative 5K to positive.
Now, will stock prices dive again, and hence take profit?

Look at the weekly chart of STI (Straits Times Index):

It has been very bullish since 8 Jun. I believe this bullish momentum is only about half way through.
The STI should break 3000 very soon.

So, I will hang on to my stocks for now.

Is the stock market rally over?

So, the indices of the world are now in negative territory, with many falling below their
200-Day MA. Technically, this should be the end of the bull market, and the start of a new bear market. But not yet, I think.

Reasons are:

1. Sentiment indicators are very bearish (this is a bullish sign)
2. Political stabilisation in Europe could occur soon
3. Stocks tend to trend higher during a US Presidential election year
4. Stocks are still cheap (low PE and PB), and Chinese stocks are probably past their lowest point in October 2011

At this juncture, I am fully participating in the GSS (Great Stock Sale).

My positions:

Noble
NOL
Semb Mar
Wilmar
Yanlord

Will be adding more in the next few weeks.

What to do when newspaper headlines scream "Polls revolt in Europe spooks Asian markets"

Today's Straits Times article screams "Polls revolt in Europe spooks Asian markets".  Should we bail? No way. For me, this is a very strong signal to buy. Remember, be greedy when others are fearful. From my experience, there is usually only one chance to buy shares at a sale every year. This should BE that SALE. I am monitoring my watchlist.

My watchlist:
CapitamallAsia
Capitaland
First Resources
Goodpack
Sakari
Sembcorp
Sembcorp Mar
Wilmar