TOL as of February 19 2012:-

Resistance

We are now approaching the 8th week of the rally.

And we are also reaching the top end of the resistance on the S&P, at 1364.

Would there be a break-out or would there be a reversal ?

How would everyone be reacting and more importantly, how would the machines be reacting ?

The week in review:-

1. Oil – Stronger. US$104 from US$99 last week from US$98 the previous week.

2. Gold – Flat. US$1723 from US$1717 last week from US$1727 the previous week. Record US$1920. Vested

3. Silver – Flat. US$33.25 from US$33.51 last week from US$33.62 the previous week. Range High: $48.58; Range Low: US$27.19; Resistance at US$38 ?

4. Cattle – Record. Cattle futures rose to an all-time high for the 10th time this year as rising demand for U.S. beef tightens supply.

5. Shanghai Equities – Flat. 2357 from 2352 last week from 2330 the previous week. Support at 2150 ? Resistance at 2400 ? RRR cut by 50bps yesterday.

6. HK Equities – Stronger. 21492 from 20784 last week from 20757 the previous week. Resistance at 22600 ? Support at 19000 ? No trade

7. Spore Equities – Stronger. 3001 from 2960 last week from 2918 the previous week. No Trade

8. US Equities – Stronger. 1361 from 1343 last week from 1344 the previous week. Support at 1205 ? At Resistance. Will there be a break-out ?

9. Japan Equities – Stronger. 9384 from 8947 last week from 8832 the previous week. Support at 8300 ? Resistance at 9965 ?

10. JPY – Weaker. 79.09 from 77.59 last year from 76.61 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. 2.4221 from 2.4026 last week from 2.4246 the previous week. Buying MYR on dips. Am concern out the upcoming GE.

13. AUD – Stronger. 1.0721 from 1.0673 last week from 1.0761 the previous week. Vested

14. EUR – Flat. 1.3147 from 1.3187 last week from 1.3160 the previous week.

15. Yield on 10 Year Italian Bonds – Lower; 5.576 from 6.61% last week from 5.70% the previous week; Record 7.483%.

16. USD – Stronger. 79.38 from 79.11 last week from 78.97 the previous week. Vested thru HKD.

17. Properties – The fall may take longer than expected, as the developers still have a lot of holding power except the smaller ones in China

18. Liquidity – Stronger. HKD 7.7539 from 7.7564 last week from 7.7529 the previous week. 52-week range is 7.7521 – 7.7972. Average Daily Turnover on HKEX at HK$66b from HK$75b last week from HK$68b the previous week. The second LTRO is scheduled for Feb. 29, with estimates that it may be two or three times the size of the first.

19. Sentiment – Bulls are still charging

20. Risk Management – Can you feel the fear in the air ?

21. Economies of the Developed Markets – Dont think there would be much changes over the next 9 months.

22. Hedge Funds – No major redemptions

23. Deleveraging – Will the downgrade of the Investment Banks, lead to some selling of existing positions ?

24. Interest Rates – Indonesia reduced interest rates by 25bps against market expectation

25. Headwinds – European Contagion, Weak Economies of the DMs, 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, Iran

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 I think we are close to the “show-time”.

Will it be a “horror show” or just an “action-movie” ?

How would this show end ?

And do you know where’s the emergency exit ?

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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