Winston's Investment Ideas 01 (Nov 08 - Apr 10)

[winston]

TOL:-

Singapore Market


Macro Situation

1) The economic situation is probably better than it was a year ago eg. credit situation
2) However, Valuation has also rebounded strongly and may have over-shot fundamentals, in some cases
3) I'm not expecting a crash but a correction cannot be ruled out
4) The Spore market is quite "spineless" and is affected by external situations eg. US market, SSE and HKSE
5) In addition, the GE is also just around the corner so a sharp correction is very unlikely


Strategy

1) STI is now at 2759 and the Range for the STI has been 1455 to 2947.
2) The 50% retracement is around 2200.
3) It's normally a strong buy if it's trading less than the 25th percentile of 1800 ( if we believe that it's not going to go lower than the range low of 1455 )
4) It's normally a strong sell if it's trading at more than the 75th percentile of 2575 ( if we believe that it's not going to go higher than the range high of 2759 )
5) We are now at the 94th percentile of the range, so it's better to be a bit careful.
6) If the range extends on both the upside or the downside, then we will need to revisit the 25th and 75th percentiles above
7) Intuitively, I think it will remain inside this range


Tactics

1) The low hanging fruits have already been plucked. Stock picking is essential now.
2) That means buying stocks with good fundamentals, strong catalyst at a fairprice.
3) You need a very strong story to be buying now. Why would somebody wanna buy that stock off you?
4) If you are a bit too confident, look at the price when it was at the 52 week low
5) If you are a bit too afraid, have a look at the price when it was at the 52 week high

[winston]

TOL:-

HSI

Macro Situation

1) The economic situation is probably better than it was a year ago eg. credit situation
2) However, Valuation has also rebounded strongly and may have over-shot fundamentals in some cases
3) I'm not expecting a crash but a correction cannot be ruled out
4) The HK market is also quite "spineless" and is affected by external situations eg. US market and SSE
5) In addition, there also a few worrisome catalysts eg. Chinese Inflation, Chinese Tightening, Initiatives to rein in prices on Chinese Properties etc.


Strategy

1) HSI is now at 20269 and the Range for the HSI has been 11,344 to 23,100
2) The 50% retracement is around 17,222
3) It's normally a strong buy if it's trading less than the 25th percentile of 14,283 ( if we believe that it's not going to go lower than the range low of 11,344 )
4) It's normally a strong sell if it's trading at more than the 75th percentile of 20,161 ( if we believe that it's not going to go higher than the range high of 23,100 )
5) We are now at the 88th percentile of the range, so it's better to be a bit careful.
6) If the range extends on both the upside or the downside, then we will need to revisit the 25th and 75th percentiles above
7) Intuitively, I think it will remain inside this range

[winston]

TOL:-


S&P 500

Macro Situation

1) The economic situation is probably better than it was a year ago eg. credit situation
2) However, Valuation has also rebounded strongly and may have over-shot fundamentals in some cases
3) I'm not expecting a crash but a correction cannot be ruled out
4) The US market is also affected by various external situations eg. Club Med countries, China's tightening, USD, Commodities etc.


Strategy

1) S&P is now at 1076 and the Range for the S&P has been 667 to 1150
2) The 50% retracement is around 909
3) It's normally a strong buy if it's trading less than the 25th percentile of 788 ( if we believe that it's not going to go lower than the range low of 667 )
4) It's normally a strong sell if it's trading at more than the 75th percentile of 1030 ( if we believe that it's not going to go higher than the range high of 1150 )
5) We are now at the 94th percentile of the range, so it's better to be a bit careful.
6) If the range extends on both the upside or the downside, then we will need to revisit the 25th and 75th percentiles above
7) Intuitively, I think it will remain inside this range but the upside could be breached if a lot of funds starts returning to the US from the risky plays eg. Emerging Markets and Commodities.

[winston]

TOL as of February 13, 2010:-

15) US & Japanese Interest Rates - How much longer can the Americans and the Japanese, keep their interest rates at close to zero ? China, Australia, Norway etc. will probably continue with their series of tightening.

The series of global tightening may have begun. Australia and Norway were ahead of the curve. It was then follow by China and now, the US.

Higher interest rates are never good for Equities. The question now is how high and how long. At this point in time, many people still expects the global tightening to be done in a slow and controlled manner. I beg to differ. I think market forces would force the tightening to be much tighter and quicker than anticipated.

I will probably add to my S&P Inverse ETF and may also initiate a Put on the HSI today

[winston]

TOL as of February 21, 2010:-


As Clear as Mud

Have you ever had those days where you you dont really know where things are heading ? Have you ever had those days where you thought that you had everything nailed solid and then out of the blue, an event a few thousand miles away, just blow everything apart? In times like that, there's no choice but to stay on the sidelines ...


The week in review:-

1) Oil - US$79.81 from US$74.13 last week. Stronger than expected especially in view of the stronger USD. The cold weather will be over soon. US$68 may be the entry point.

2) Gold - US$ 1121 from US$1090 last week. IMF Sale and low Chinese demand may weigh on things. I'm waiting for US$1020.

3) Other Commodities - correcting as well. Still waiting for the 50% retracement.

4) Shanghai Equities - Closed for a week at 3018. Strong Support @ 2750. As the US markets has rebounded strongly, I'm not expecting a strong correction on Monday. The 0.5% RRR increase last Friday, is probably a non-event now. I may trade the A50 on Monday depending on the momentum

5) HK Equities - 19894 from 20269 last week. Weaker than expected but on very low volume. Strong Support at 19500 and thereafter, 19000 . Maintained positions in AMVIG, Fosun, GCL-Poly and Asia Cassava. I may buy a Call on the HSI depending on the situation.

6) HK IPO - Stopped applying for the HK IPOs. The newcomer Ruinian was also weak.

7) Spore Equities - 2757 from 2759 last week. Support at 2625.

8) US Equities - 1109 from 1076 last week. A lot of fire-power on the sidelines. Support at 1035 and then 995. May cut half of my S&P Inverse ETF position on the next correction.

9) Japan Equities - 10124 from 10092 last week. Support @ 9850, 9075. Inflows into Japan for the 8th week. May be a good bet since Japan has not moved much since March 09.

10) Emerging Markets - Small inflows.

11) Properties ( HK, China & Singapore ) - The government is trying to cool property prices. How many people will be hurt ?

12) Iran - When will sanctions starts ? Munich Re has stopped accepting business in Iran

13) US & Japanese Interest Rates - Probability of a sudden spike has increased

14) USD - 80.72 from 80.41 last week. Getting close to the 50% retracement of 82

15) Trade War - The Dalai Lama meeting is probably a non-event now.


Intuitively, I think that valuations have outpaced earnings. Therefore, a correction is in order. However, there seems to be a lot of fire-power on the sidelines and they are buying on dips. Was it vested interests supporting the market ? Was it short covering ? Or was it real genuine buying ?

As things are as clear as mud, I'm only tip-toeing back into the market. The stocks that I'm buying now must have the following characteristics:-
1) A great story for the next person to be buying it off me
2) Trading at a fair valuation
3) A strong catalyst
4) Strong enough to withstand a double-dip

Stock-picking is essential now as it could be a trend-less market for quite a while longer.


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. Please do also feel free to provide me with your kind thoughts and comments.


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[millionairemind]

W - Tks for your weekly TOL.

It's always a thread I enjoy reading, cos' I am lazy... and you are a good thinker

[winston]

You're welcomed MM !

It forces me to think else I would be all over the place.

And if I'm all over the place, I would be like the deer gazing into the headlights

[kennynah]

8) US Equities - 1109 from 1076 last week. A lot of fire-power on the sidelines. Support at 1035 and then 995. May cut half of my S&P Inverse ETF position on the next correction.

which may occur this coming week....right on Monday.... just my guess based on my own TA indicators...one of which was highlighted by MM in the "US Direction" thread...ie, the SMA resistance...

[eauyong]

TOL as of February 21, 2010:-

4) Shanghai Equities - Closed for a week at 3018. Strong Support @ 2750. As the US markets has rebounded strongly, I'm not expecting a strong correction on Monday. The 0.5% RRR increase last Friday, is probably a non-event now. I may trade the A50 on Monday depending on the momentum

The A50 closed down 2.73% to 12.82 on turnover of 970.46M. last Friday. How much more can it go down? The closest for SSE to 2750 was on Sept. 29, 2009.

[winston]

Agree eauyong.

A lot of cash were side-lined because of the week-long CNY. Therefore, those cash would be coming back to the market and I'm expecting the SSE to go up this week.

The range low for the A50 was 12.52. We are now at 12.76.