Psychology of a Market Cycle 6-29-2013

SPX, PSE, below 40 RSI list, Auslralia, Germany, UK, HK and China 6-28-2013

SPX 

Seems that we have found the bottom of this correction. Possibly ending the Int Wave IV of Major Wave 3 of this Primary Wave III Bull Market.

We now find the 1640 resistance next in line,with possible short term pullbacks underway, a higher low on the next pullback is a good sign, then we go for a target of revisiting the all time high. A fall below the 1550 level is lowered now to around 20% chance.

 PSE

 PSE - below RSI 40, all good except PX, Commodities in long term bear market

 

 Australia

Germany

U.K.

 Hong Kong

China

Revisit: Best strategy If you hate fluctuations and want to invest in long term products like Corporate/Foreign Bonds 6-27-2013

Following to my last year's post regarding:

Best strategy If you hate fluctuations and want to invest in long term products like Corporate/Foreign Bonds 6-17-2012

We summarize how Dow Jones/SPX/US Indices can affect our High Yield funds.

Theoretically, they move on the same path, if US corrects 10%, so will these High Yield funds be. If you are good in technicals, you can sell these funds when at peak and buy them again at lows, you didnt just get the gains, you also get the monthly dividend payouts.

In typical bull markets, Equity always beat up any investments around the globe, but when sideways market, these high paying dividend funds may be the best investment you may have.

In bear markets, these funds dip as well, usually less compared to equities, still you get dividend payouts monthly. Where you could just add up fresh funds in dips, making your Yield% higher.

Junk bonds do have risk also, they're main issue is a "default", (Defaulting on a debt obligation can place a company or individual in financial trouble. The lender will see a default as a sign that the borrower is not likely to make future payments. For example, if Company XYZ is unable to make a coupon payment on its bonds, the bondholders would place XYZ in bankruptcy. This would give the company an opportunity to claim XYZ's assets as a form of repayment for the debt.)

Diversify your money according to your risk level, and these investments are to those who want small to medium risk, but higher return. 

Please revisit my old post below to know how to invest in Corporate/Foreign/High Yield Bonds.

Best strategy If you hate fluctuations and want to invest in long term products like Corporate/Foreign Bonds 6-17-2012

Treasury Yield vs Dow Jones Industrial vs Fund Houses holding US Treasuries 6-27-2013

Rate hike is possibly seen in the next couple of months.

I applied comparison on the 3 biggest area where money circulation go. These 3 are Fund houses buying US treasuries, US treasury yields (I used 10yr for this chart) and Dow Jones Industrial/US Index.

Overall, what I can observe is that, when treasury yields start to rise, it rattles the Global Markets at first, but will be essential to fuel the Bull Run.

Once the rates are into the upper levels and where business and economy weakens due to expensive borrowings etc, rates need to be lowered again to strengthen the economy.

In 2013 scenario, it looks like the U.S. Economy was spoiled at very low Yields from 2011-2013, and need to pickup Yield% to increase mortgages, bank loans income and so on. And increasing Yields and Rate means that Central Bank is becoming confident that market is growing.

Hopefully, Central Bank is doing the correct thing, fueling up this Bull Market, and they must take this one step at a time.

SPX update and complete charts with technicals on PSE bluechip/2nd liner stocks 6-25-2013

 
SPX followed through its recent breakdown with another triple digit lost, making it fall around our price targets.

We still need to see if it rallies shortly and makes new low to end this correction.

For PSE, please find below almost all blue chips and their important support. Some today were "played" by huge firms,making a false breakdown,and brought them up by the close.

Happy Shopping!

PSEi making new 52 week lows, having some good signs 6-24-2013

Daily Chart since 2008

  Medium term Chart

Philippines took multiple boosters(7.x% GDP, S&P Fitch upgraded us 2 notches, good imports/exports) that helped PSEi pump up into new highs! Everyday is like winning a lotto hitting "New All Time Highs" and posting it all over the news. 

Now, there's not even one bad news over PH that made us hit fresh 52 week lows, wonder why what's the reason we are having this correction?? One clear answer is that, people was too complacent and too bullish into this country, pumping money into the system, not considering that valuation was already too high. It hit 22x P/E last 7400, where only the 10yr average was around 15x. And also, market already gave us a good gain, a whopping 200% return in 2 years. It's really normal that market needs to take back some of its gains.

Anyway, we focus on today's analysis,which gives a shining hope that eventually we could bottom soon. I have noticed and concluded some factors that a possible short to medium term bottom could be happening soon, but no assurance Bull comes back immediately, we could bottom but do only a sideways pattern for example at 5800-6400 for 6mos, etc.

1. MACD reading was the worst in the history of PSEi (1990-2013). Meaning this 24% drop was the worst drop beating the drop we encountered last 2008 recession.

2. 200MA and current price meet again, last time it happened was Oct 2011. PSEi may find support near this area.

3. We have laid out the target downside of Dow Jones/SPX: 1.5% from last Friday's close minimum, to a target of 4%. That brings PSEi hit around 5500-5800 level. (If markets can extend its rally again and again (like what happened on this rally), it can extend its decline multiple times as well). LINK HERE

4. Head and shoulders of PSEi has target downside of 5700-5900.

5. Valuation dropped to around 17.78 as of 6/24/2013 close, better valuation than before.

6. Few good supports technically are also in place around 5500-5800, and RSI at 29.0

7. We are now in the middle of 31.8% and 50% retracement.

24% in decline is already considered bear market(when market declines 20% or above), but for me, this could just be a correction, since we really flew too high. Though your portfolio would really feel devastated like a bear market scenario :)

Keep your cash ready as always,and maintain the 70-30 rule in investing. 70% investments, 30% cash/liquid investments. As we cannot say if worst may be over. 

Worst case scenario for is that Europe breaks below its support, US follows and decline double digit 15-20%, we might find PSEi near 5000 level (61.8% retracement) 10% chance.

Stay safe and happy shopping! 

Stocks/Indices that I follow which are below RSI 35 6-24-2013

Data as of June 21,2013 closing.

Attached above the Stocks/Indices that I follow which are below RSI 35.

We can see that not only stocks are below the RSI 30, some Major Indices are below RSI 30 as well. hey Most of them are really beaten up and oversold. MACD and Moving Averages are also low and Asia in particular had the 1st "Flash Crash" in 2013. Asia had this Flash Crash last 2012,but PH had this last 2011.

Many conglomerates are hovering around 20 RSI,and extremely low in its average, we still try to look for strong support before buying into these technically attractive stocks. Even HK, China and UK RSI got below RSI 30, which usually indicates a short term bounce is probable.

YET, we still need US to bottom out before anything else, for me always make US the primary direction of this market. If Asia corrected way in advance, dont let the ticker fail you, as from my experience, Asia and Europe also wait US to bottom out before they begin to rally.

SPX broke down, focus on target support for entry points 6-21-2013

The SPX and most US indices has finally broke down! Cheers to all the people who had the patience to wait for this correction,before we hit new highs. Since momentum has changed to the downside, we now focus on our target downside for good entry points.

We have setup a few sets of support for this 40pts SPX drop.

1. First it broke down the uptrend lines, the 40pts drop confirmed that we broke down out of support, the target downside is 1550.

2. Elliot Wave length retracements (assuming we are in the intermediate iv correction of Major Wave 3,Primary III):
minor a was 89 pts long. target for minor c:
0.618a = 1598 low
1a = 1563
1.618a = 1511

3. Fibonacci retracements:
38.2% = 1550
50% = 1518
61.8% = 1472

4. Medium-Long term uptrend since Oct 2011 has MAX support of 1482.

Roughly, we can say that good entry points can be as early as 1563, with a main target of 1550, and we can say 50% Fibonacci retracement of 1518 (50% retracement) is the worst target for now. (61.8% is too deep)

US Markets and quick guide where the markets can go 6-17-2013

Philippines and Asia Pacific in particular took a massive hit ranging from 10% to 20% correction in just 3 weeks time. What's the current status of the US and how can we prepare for such situations? Let us do some quick recap and analysis.

For the US, we are using EW Analysis and Technical Analysis to at least predict what our stop loss and target prices may be in the short to long term trades.

SPX and Dow are still in short to medium term uptrend, uptrend lines are still intact since Nov 2012, in any EW and Technical forums, they are already anticipating a break below on this uptrend line, to correct at least a month, before we hit a new fresh highs.

SPX and Dow already corrected 5% from its peak and stopped three times around 1607 or 15000 for Dow. Its like hanging by the cliff, with no price actions yet. Dow Futures looking into recovering its 100pts loss last Friday night, and might delay again any directional patterns we are anticipating.

We still see 3 possible scenarios here,using any technical or subjective analysis:

1. Market bounces from 15k/1607, continues its 6months rally since Nov2012 and makes/revisits new highs extending rally to 7th/8th month (30% chance)

2. The correction is done and market makes new high reaching 16k/1700 (30% chance)

3. We are in a correction, and will break below the important short term uptrend support, with estimate correction of 5% more (1550 SPX or 14500 Dow), then rally continues and we make/revisit all time highs. (40% chance)

I personally want #3 to happen, and my #1 indicator when I can fully invest in Asia and the Philippines. As of this moment, I am 60% cash and waiting for better opportunities to come. Hopefully Asia doesnt bottom out yet,and waits for US Markets to declare the direction of the markets.

Happy Shopping!: 5yr charts and supports of: AC,BDO,BPI,EDC,FGEN,GTCAP,LPZ,MBT,MEG,MPI,MWC,PNB,RCB,SM,SMC,SMPH, TEL 6-13-2013

All 5 year charts below focus on Short, Medium,Long Term trendlines and supports.

Allow Buying opportunities near supports and wait for stronger supports upon breakdown.

Best thing when you started early, is finish off this correction in Cost Averaging, nothing beats lower average,thus greater trading opportunities.

Direction of PH and Global Markets still depend on the direction of US and Europe indeces, report will be released in few days. Happy Shopping!!