Tuesday, August 25, 2015

Short Update: The pain lingers


The SSE is down 7.6% again today. Oil is still at the $38 handle.

Fundamentally, I think things can get a lot much worse for stock markets, especially since there is a huge mismatch between price and fundamental values for many developed markets. The stock market isn't the economy, and the economy isn't doing all that great in my opinion. The Shiller PE is still at 24. Normal PE is at 19. This is madness, especially when the STI is trading below 12.

"Low interests rates means higher multiples", they say. Whatever.

However, technically short-term indicators have flagged oversold levels and this could mean that we are due for a nice big fat dead cat bounce at this juncture. Of course, I think it is a bull trap. I might even consider shorting if the S&P500 hits 2040.

I don't get why people think that after the US markets have dropped for just 2 weeks the correction is over, and it's now time to BTFD.

Longer term technicals look to me like the fun has just begun.

What's the rush to get invested? Inflation? We're in deflation mode with CPI at -0.4% and Core Inflation at 0.4%!

In the future, I'm expecting a substantially weaker USD, higher commodity prices across the board, and of course lower stock market prices.

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