TOL as of February 05, 2012:-
How high can you climb ?

The market has been grinding higher for about 6 weeks now.

On the S&P 500, we are supposedly hitting resistance.

What other catalyst is out there, to drive the market higher ?

The bears did not know what hit them.

And the bulls are afraid to get off the train.

The week in review:-

1. Oil – Weaker. US$98 from US$100 last week from US$98 the previous week. If Panetta is only expecting Israel to take out Iran in April, why worry now ?

2. Gold – Weaker. US$1727 from US$1732 last week from US$1664 the previous week. Record US$1920. Vested

3. Silver – Weaker. US$33.62 from US$33.86 last week from US$32.13 the previous week. Range High: $48.58; Range Low: US$27.19; Resistance at US$38 ?

4. Shipping – Norden, Europe’s biggest publicly trading commodity shipping company, hired a Supramax vessel at no cost other than fuel charges, its first such transaction in a quarter century

5. Shanghai Equities – Stronger. 2330 from 2319 last week from 2163 the previous week. Support at 2150 ? Resistance at 2400 ?

6. HK Equities- Stronger. 20757 from 20502 last week from 20110 the previous week. Resistance at 20600 then 22600 ? Support at 19000 ? No trade

7. Spore Equities- Flat. 2918 from 2916 last week from 2849 the previous week. No trade

8. US Equities- Stronger. 1344 from 1316 last week from 1315 the previous week. Support at 1205 ? At Resistance of 1345. Will there be a break-out ?

9. Japan Equities – Weaker. 8832 from 8841 last week from 8766 the previous week. Support at 8300 ? Resistance at 9000 ?

10. JPY – Flat. 76.61 from 76.68 last year from 77.03 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 – Stronger. 2.4246 from 2.4325 last year from 2.4444 the previous week. Time to buy some MYR ?

13. AUD – Stronger. 1.0761 from 1.0659 last week from 1.0495 the previous week. Vested

14. EUR – Weaker. 1.316 from 1.3220 last week from 1.2935 the previous week.

15. 10 Year Italian Bonds – Lower; 5.70% from 5.90% last week from 6.25% the previous week; Record 7.483%.

16. USD – Stronger. 78.97 from 78.79 last week from 80.13 the previous week. Vested thru HKD.

17. Properties – The questions to ask are “how long ?” and “how low ?”.

18. Liquidity – Stronger. HKD 7.7529 from 7.7561 last week from 7.7610 the previous week. 52-week range is 7.7574 – 7.7972.

Average Daily Turnover on HKEX at HK$68b from HK$60b last week from HK$50b the previous week.

19. Sentiment – Stronger. What has changed from 2 months ago ?

20. Risk Management- Cash is trash now ?

21. Economies of the Developed Markets - Were there really green shoots in the first place ? Maybe the microscope was dirty.

22. Hedge Funds - No major redemptions

23. Deleveraging - Is money printing really a stronger force than delevergaing

24. Interest Rates – CIC has agreed to a reduction in dividends for the Chinese banks, removing some pressure for a RRR reduction and interest rate reduction

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 – Higher

Were you smart enough to predict this rally of 6 weeks ?

If not, why would be able to predict it’s fall ?

Anyway, friends and relatives who have been out of the market, are starting to contact me. It’s normally a good contrarian indicator

However, warning signs does not mean that things would reverse immediately.

So enjoy the ride but keep an eye on where the emergency exit is.

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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