SSE has turn bullish since early July 2010

Since early July 2010, Shanghai Stock Exchange (SSE) has broken from the down trend channel and it is looking bullish now. This is despite the slowing growth and the various negative rumours of potential financial crisis looming China due to large property bubble and slowing export.

The SSE index is currently around 2570 and the near term resistance should be around 2900 where it is expected to meet the 200SMA. Subsequent resistance at 3150-3300 where one would expect some corrections. (even if it were to advance again)



While the slowing growth due to slowing export is true, the local market and local consumption is picking up. Even though the stimulus effect is waning off, there is still extra inertia from the move and it won't come to halt immediately. Hopefully the recovery in the western world will pick up speed and export will creep back. While slowing GDP is expected in China, the overall growth story is still intact. If the soft landing that China is hoping for can be achieve, the overall long term growth is still optimistic though in a slower pace.

To participate in China Growth while not being able to buy into the SSE stocks, one alternative is to buy through ETF. In SGX market, one can choose United SSE50 China ETF.

Will US Dollar Collapse?

This is a video that was submitted by someone who believes that the dollar will collapse.



Based on the argument, if other countries starts to use other currencies a way from US Dollar in international trade, US Dollar will start to lose its significants and collapse.

Indicators:
1. China, India etc buying Gold.
2. Arab nations starting to work with their customers other than US to use a "basket of currencies".
3. Central banks starting to purchase non-US Dollar currencies like Yen, Euro etc.

What is the situation on the "Main Street" in US now?
What will these young people do and how will they grow up to be?
What is their future like?



What is next for the US government? Continue to spend? Will they continue to get money from foreign countries? Or to put it more accurately, getting more goods from foreign countries using IOU notes? Will the IOU notes continued to be recognized?

Market heading for a strong rally

With the positive news that the developed nations are acting together to avoid the major financial melt down, the global stock market is heading for a strong rally. The STI is showing strength in the surge yesterday.



This is probably the strongest one-day rally we had ever seen. Today, it maybe more buying as US and European markets all showed strength last night. Expected to rally for a period of 4-6 weeks before seeing next wave down. There will be a mad rush to buy this week. That may push the index up by another 200 points before investors start thinking again.

Stock Market Major Trend is Still Down

Yesterday, Dow Jones and S&P gave up all their gains since the rescue of Freddie Mac and Fannie Mae due to the uncertainty facing Lehman Brothers. The market experience continuing selling pressure until near towards closing. This morning, STI followed and give away over 3.1% to close at 2541.  At the rate it is going, I won't be surprise if it hit below 2000.

Market is expecting more troubles to come and Merryll Lynch has been siad to be next in sight. With such market sentiment, it would be safer to stay at the side line for long term investors. This is a day-Traders'  environment. You need to be fast and nimble. No time for careful thinking if you are playing the market now.

Today, I am expecting US market to have some further selling.

Stock Market Review - Has the market bottom out?

This is a billion dollar question!

If you are sure that the market has bottom, what would you do? Of course buy big time and wait for it to recover. What if it takes another 5 years to recover? Are you able to wait for so long? In the end of the day, investing is about ability to hold it out. If you are only looking at 3 months or 12 months time frame, then, it will be speculating on short economic cycles and a lot of risk is involved.

When the market is on a down trend, it tends to be extremely volatile. Price swing is much large than in the uptrend. You need to be able to take the fluctuation in good strike and be confident in your decisions.

According to Ben Graham, one must be able to take the down swing of up to 33% in order to be able to consider yourself an investor. If you are think of entering at the bottom of the market and trying to sell at the peak of the market, chances are that you will miss both by a lot.

Stock Trading Commandments

Never Turn Trades into Investment

When the market move against you, cut loss. When the you get it right, take profit. Don't be greedy. You won't know when it will turn.

Your First Loss Is Your Best Loss

When you trade turn awry, cut loss fast. The subsequent loss is likely to be more severe.

It Is OK To Take Loss When You Already Have One

Losses, realized or unrealized, are actual losses. Unrealized losses if not taken, may lead to bigger losses.

Never Turn a Trade Gain Into Investment

Do not be too greedy. Know when to get out. Market can turn anytime.

Tips Are For Waiters

Don't be fooled by hot tips.

You Don't Have a Profit Until You Sell (Close the Trade)

Paper gains can be wiped out when market swings.

Control Losses: Winners Take Care of Themselves

It is more important to pay more attention to losing trade and limit the losses. You don't have to worry too much for the winners.

Don't Fear Missing Anything

The opportunities will come again. Don't chase the price.

Don't Trade Headlines

News headlines are too brief and inaccurate. They just want to get it out quick. Read into details. The stock will not fly away.

Don't Trade Flow

Don't buy just because someone is trying to sell you and you think it is convenient. Do research before you buy anything.

Has the market bottom out yet?

Many investors like to use the term "bottom fishing" to describe their action in bargain hunting for under valued stocks. In essence, what they are doing is to try to catch bottom. However, for many experienced traders, catching bottom is a dangerous action. Here is why:

Market bottom is a process, not an event.

Why you can't catch the bottom. For investors, your only choice is to buy stocks on the uptrend, not downtrend. Let other people find the bottom for you. Just sit back and watch them fight it out. Conserve your capital and avoid taking unnecessary risks.

Just look at the mistake I made on Chip Eng Seng. I thought when the price dropped from over $1.10 to $0.83, it was a good time to enter. In the end I had to cut loss at 0.59 (yet another mistake for not sticking to my rules of cutting loss at $0.75). During the market crash, the sell down can be fast and furious. If you are not in front of the screen, you will be caught dead. Yes, I was on a consulting project during the period and when I look at it, it was already hitting $0.60. So, the notion of buy-and-keep is not always the best approach. As you can see, this counter has gone down from peak of $1.10 to $0.49 (more than 50% off) and yet still bottom is not in sight.