TOL as of January 22, 2012 :-

Happy Chinese New Year !

And may you all be always Happy, Healthy, Wealthy and Lucky in this Year of the Dragon !

So far, 2012 has been very good to the bulls.

We have had a good “January Effect” and now, quite a good “Chinese New Year” rally too.

The question now is, “How long can the bulls continue to “milk” things ?”.

The week in review:-

1. Oil – Weaker. US$98 from US$99 last week from US$102 the previous week. Moderate winter ? Iranian glut ?

2. Gold – Stronger. US$1664 from US$1632 last week from US$1621 the previous week. Record US$1920. Vested

3. Silver – Stronger. US$32.13 from US$29.72 last week from US$28.72 the previous week. Range High: $48.58; Range Low: US$27.19; Resistance at US$38 ?

4. Orange Juice – Surged to a record on mounting concern, that U.S. supplies may be reduced by citrus-greening disease in Texas and a slowdown in imports, as the government tests for a banned fungicide.

Last week, Cattle surged to a record. This week, it’s the turn of Orange Juice. Inflation or Deflation ?

5. Shanghai Equities – Stronger. 2319 from 2245 last week from 2163 the previous week. Support at 2150 ? Resistance at 2400 ? Markets seems to have already priced in a RRR reduction or interest rate cut after CNY.

6. HK Equities- Stronger. 20110 from 19204 last week from 18593 the previous week. Resistance at 20600 ? Support at 18600 ? Sold Lianhua

7. Spore Equities- Stronger. 2849 from 2792 last week from 2716 the previous week. Sold Noble

8. US Equities- Stronger. 1315 from 1289 last week from 1278 the previous week. Support at 1205 ? Resistance at 1345 ?

9. Japan Equities – Stronger. 8766 from 8500 last week from 8390 the previous week. Support at 8300 ? Resistance at 8720 taken out. Next Stop 9000 ?

10. JPY – Flat. 77.03 from 76.96 last week from 76.97 the previous week. The 52 week range is 75.62 to 79.50.

11. Emerging Markets – Inflows; http://www.epfr.com/

12. MYR to SGD – Weaker. 2.4444 from 2.42424 last week from 2.4307 the previous week. Time to buy some MYR ? Need to be careful as the GE is coming up.

13. AUD – Stronger. 1.0495 from 1.0322 last week from 1.0228 the previous week. Vested

14. EUR – Stronger. 1.2935 from 1.2680 last week from 1.2724 the previous week.

15. Yield on 10 Year Italian Bonds – Lower; 6.25% from 6.641% last week from 7.13% the previous week; Record 7.483%.

16. USD – Weaker. 80.13 from 81.45 last week from 81.25 the previous week. Vested thru HKD.

17. Properties – Seven years of lean ?

18. Liquidity – Stronger. HKD 7.7610 from 7.7672 last week from 7.7652 the previous week. 52-week range is 7.7598 – 7.7972.

Average Daily Turnover on HKEX stronger at HK$63b from HK$53b last week from HK$39b the previous week.

19. Sentiment – Stronger. And when will the shorts have to cover ?

20. Risk Management- Risk-On is back in fashion. So is Complacency.

21. Economies of the Developed Markets – The green shoots have not really grown since Helicopter Ben first saw them under a microscope

22. Hedge Funds – Investors may add about $80 billion of new capital to hedge funds globally this year, the most since 2007, Barclays Plc (BARC) said in a report.

23. Deleveraging – Loans from European banks to clients in Hong Kong fell 6 percent in December from a month earlier, but it is still too early to say whether euro zone lenders are pulling back from Asia, the HK Monetary Authority said on Wednesday

24. Interest Rates- Smooth ride downwards, for the time being

25. Headwinds – European Contagion, Weak DMs Economies, Elevated Commodity Prices, Slower EM growth, Deleveraging, Lower Margins, Weaker Earnings, Falling Property Prices in HK & China, Tighter Credit Requirements, Downgrades by Rating Agencies, Austerity Programs

26. Tailwinds – Low Interest Rates, EM Consumption, EM Demographics, Fair Equities Valuation, Cash on Sideline, Cash in Corporations for M&A, Cash in short-term Bonds, Buybacks, Money-Printing

27. Market Direction – Stronger

The S&P 500 is now at 1315.

The next resistance is supposedly at 1353, reached in July 2011.

How long can the bulls continue to milk things ?

And I should remind myself that markets tend to overshoot, both on the downside and upside.

The above is to help me crystallize my thinking. It’s not a recommendation to Buy or Sell. Use the above comments at your own risk and please do also feel free to provide me with your kind thoughts and comments

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