1 Should you buy energy stocks? (Fortune)
2 How Apple maintains explosive earnings growth (Fortune)
3 Paulson To Launch Retail Version Of Flagship In Europe (FINalternatives)
4 A Short History of Financial Euphoria by John Kenneth Galbraith
5 What Hedge Funds Are Seeing in the Current Market (at Seeking Alpha)
Monday, July 26, 2010
Saturday, July 17, 2010
Friday confirmed my prediction, bear market ahead
As we have predicted, the DJIA faced resistance at 10400 level. On Friday it went down more than 260 points out of bad economic data and poor cooperation reports. We said before that if the Dow fails to achieve 10400, there will be a big bear market waiting ahead. With the confirmation on Friday, this is very likely to be true, unfortunately. My personal guess is that the market is going to decline to about 8000 and then come back again at the end of the year.
I have already reduced my long exposure and begin to bet against the market. This is going to be a tough summer for investors. Be patient and I am sure the market avalanche will turn out to be a good buying opportunity by the end of the year when the bulls coming back.
Thursday, July 15, 2010
What I have read this week (July 12)
1 Strategies: Robert Prechter’s Market Forecast Says ‘Take Cover’ (NYT)
2 Investing: When Cash Takes a Vacation (at BusinessWeek)
3 Hedge Fund Third Point Files 13D on Emmis Communications (EMMSP) (Marketfolly)
4 David Einhorn's Hedge Fund Greenlight Capital Buys Ensco (ESV) (Marketfolly)
5 One Up On Wall Street by Peter Lynch
2 Investing: When Cash Takes a Vacation (at BusinessWeek)
3 Hedge Fund Third Point Files 13D on Emmis Communications (EMMSP) (Marketfolly)
4 David Einhorn's Hedge Fund Greenlight Capital Buys Ensco (ESV) (Marketfolly)
5 One Up On Wall Street by Peter Lynch
Wednesday, July 7, 2010
What are we expecting in July?
The Dow Jones Industry Average rallied on Wednesday after two consecutive months of decline. The Dow surged 274.66 points and ended above 10,000 out of the optimism of the US economy. so, is this optimism justified? Is today's trading a bullish sign? My opinion is not just a 'NO', but not yet.
If we take a look at the historic data, we will find that there has never been a bearish market that lasted more than three years, not even the 1929 market catastrophe. The longest market contraction happened during the 2000 technology stock bubble, which lasted about three years and followed by a big bull market (Shown in the graph below). If this is true, then we can expect to see a bull market soon because it is almost been three year since the market started to tumble during the end of 2007. Therefore, for the worst,we have yet 4 or 5 months left to see the bull coming back. However, we do not need to be that pessimistic. The martket is very likely to rally before the end of this year, if certain conditions can be met.
As for now, I am sticking with my bearish view about the market. I have always held the view that the market will have another big tumble in 2010 after a bullish year in 2009. I was proven to be right as the market went down in May and June. Despite today's big surge, I am still very bearish. Today's big increase is very likely to be a retaliatory surge after the market touched resistance at about 9700. However, it is going to face another price celling at about 10,450. If the market fails to achieve this level in the next couple of days, I will say there will be a big market decline. The Dow could be as low as somewhere around 8500 before the expected bullish market coming in the end of the year. However, if the Dow rises above the celling price in the coming weeks, it is very likely for us to jump right into the bull market I just talked about.
Until then, my suggestion is to be consevative and be prepared for another market dip.
If we take a look at the historic data, we will find that there has never been a bearish market that lasted more than three years, not even the 1929 market catastrophe. The longest market contraction happened during the 2000 technology stock bubble, which lasted about three years and followed by a big bull market (Shown in the graph below). If this is true, then we can expect to see a bull market soon because it is almost been three year since the market started to tumble during the end of 2007. Therefore, for the worst,we have yet 4 or 5 months left to see the bull coming back. However, we do not need to be that pessimistic. The martket is very likely to rally before the end of this year, if certain conditions can be met.
As for now, I am sticking with my bearish view about the market. I have always held the view that the market will have another big tumble in 2010 after a bullish year in 2009. I was proven to be right as the market went down in May and June. Despite today's big surge, I am still very bearish. Today's big increase is very likely to be a retaliatory surge after the market touched resistance at about 9700. However, it is going to face another price celling at about 10,450. If the market fails to achieve this level in the next couple of days, I will say there will be a big market decline. The Dow could be as low as somewhere around 8500 before the expected bullish market coming in the end of the year. However, if the Dow rises above the celling price in the coming weeks, it is very likely for us to jump right into the bull market I just talked about.
Until then, my suggestion is to be consevative and be prepared for another market dip.
Monday, June 28, 2010
What I have read this week (June 28)
1 A lobbying tempest engulfs financial overhaul (Yahoo Finance)
2 SandRidge hedge fund hit in June by natgas trades (Reuters)
3 AOL Waves Bye-Bye To Bebo (Forbes)
4 BP shares hit 14-year-low; shares down over $104B (Yahoo Finance)
5 FACTBOX-New regulations limit banks' investments in hedge funds (Reuters)
6 Asian hedge fund hopes take a dive in 2010
2 SandRidge hedge fund hit in June by natgas trades (Reuters)
3 AOL Waves Bye-Bye To Bebo (Forbes)
4 BP shares hit 14-year-low; shares down over $104B (Yahoo Finance)
5 FACTBOX-New regulations limit banks' investments in hedge funds (Reuters)
6 Asian hedge fund hopes take a dive in 2010
Cliff Asness discusses trading strategies in AQR Captical Management
Recently, Cliff Asness was interviewed in Chicago which he talked about how to make money in a volatile market. He talked about mutual-fund format fund can be used to make money in either market direction, up or down.
Sunday, June 20, 2010
What I have read this week (June 21)
1 A lobbying tempest engulfs financial overhaul (Yahoo Finance)
2 SandRidge hedge fund hit in June by natgas trades (Reuters)
3 AOL Waves Bye-Bye To Bebo (Forbes)
4 Hedge Hunters: Hedge Fund Masters on the Rewards, the Risk, and the Reckoning by Katherine Burton
5 Gold Is Good, But Gold Mining Is Better (Marketfolly)
6 BNP Vet McGrath Garners $500M For Hedge Fund (FINalternatives)
2 SandRidge hedge fund hit in June by natgas trades (Reuters)
3 AOL Waves Bye-Bye To Bebo (Forbes)
4 Hedge Hunters: Hedge Fund Masters on the Rewards, the Risk, and the Reckoning by Katherine Burton
5 Gold Is Good, But Gold Mining Is Better (Marketfolly)
6 BNP Vet McGrath Garners $500M For Hedge Fund (FINalternatives)
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