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| Monday, October 22, 2007 |
| Singapore's version of Black Monday? |
We will see lots of panic selling tomorrow. Prices will go down once again. If you ask me, I will say, it wont even hit the prices of counter 2 weeks of the bottom. There are a few reasons to put it across.
Firstly, we are still not far away from the recent crash. People have memory and thus short term players will be flushed out due to fear, long term players will be cautious but understand that not much has changed in the macroeconomic area.
Secondly, people now anticipate this fall tomorrow and though it will be lots of selling, we would understand that there will be people who will pick bargains. What price will be good? As I mentioned, it won't go as far down and support will be found at the recovery zones (approx 2 weeks after bottom).
Thirdly, for S-shares, this will be a good time for those foreign to push the price of good stocks even further so that they could get at a good entry level. One example might be FerroChina. Judging for the times and sales, 251 lots were done at opening. This doesn't look like contra covering as contra covering would be done at most 3 bids below yesterday's close. No adverse news on the previous day further reaffirms the decision that it might be institutional hands.
We look further in and ask ourself, what did they do it?
IF the company is rotten, they would have sold slowly, which might earn them more bucks. The fact that they did this could be down to these reasons.
A) They want it cheap
B) They shorted the counter
Either way is similar as they might have anticipated the bad run in DJ and increasing oil prices and other issues, resulting them to short the counter.
I am a believer of option A though. Foreign funds are coming and pleeeeeease, they wouldn't be so dumb to buy indiscriminately. While I do not have a clear picture on how the buying process works (Determined by a group of many small investors or a small group of large investors), I do understand that most China stocks with the exception of YZJ have been showing weakness. In fact, if market does badly, S-shares will be even better supported. And with China showing more chances of correcting, they might invest more in these funds. This will only do good to our S-shares.
Hah. Anyway, I have deviated from my topic of discussion. I feel tomorrow will fall bad, with little recovery. The worst will most probably be over by Friday, and we would see mild drops till the FOMC meeting. Bargain buying could be done on Wed or Thurs although we must keep in mind that rates might not be cut.
I have re-orged my shares for the third time this year, and according to my bro, its a bit too much. And I fully agree. I have lots of struggle between adopting a 100% trend following system and having earlier profit taking in my system. I have thus decided to incorporate some fundamental analysis so as to filter out the trending stocks with least potential. If there are 10 trending stocks and I have to choose 1, it might eventually be down to the fundamentals of the company. Of cos, I will have a systematic approach to that, and I will try to make it as quantitative as possible.
Anyway, cheers for the week |
posted by Nenix @ 2:02 AM   |
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| NenixDreams Fund |
| Fund launchprice on 1st August 2006= $1
Target for 2007 = Beat STI index
Current price of NDF as of 1st Oct 2007 = $1.58
Current price of STI as of 1st Oct 2007 = $1.54
Difference with STI index is 0.04
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