Friday, October 9, 2015

Short Market Musing

Since last week, the S&P has been on a tear. From about 1870 we have gone back up to 2010, which is a monster 7% rally is just 2 weeks.

The rally in the STI has been about the same, 7% and now the STI ETF is over the $3 mark.


Personally, I think this is just a bounce. Singapore should be heading into a recession with a negative Q3 print since Q2 was already -4.6% qoq.

The USD/SGD topped out at about 1.435 only last week and now we're sitting around 1.40. This is very cute, considering the splash on the Business section of the ST citing that "experts" are forecasting weakening of the SGD. I've seen bank analysts throw up 2016 year end estimates of 1.495. *cough*career-risk pussy calls*cough*cough* Of course, I'm not a bank, nor an expert, so I can say whatever I want. I stick to my guns that the USD has topped out. However, considering how much it has fallen in the recent days, the technician in me would punt for a bounce and go long in the really short term, but I still think we go down in the long term.

And of course, this goes very well for precious metals as it seems that we have bottomed. Both gold and silver are making higher lows and Silver is now struggling to burst through its 200DMA. At current prices, I am past breakeven and I am in profit for both my gold and silver investments. That might give you an idea about how aggressively I have been adding to my gold and silver positions in the past few months to lower down my average cost to such levels.

Although I see plenty of value in many Singapore stocks, I am fairly certain (and of course implicitly betting so by being so heavily in cash) that a local recession and the subsequent global fallout will negatively affect the local stock markets and send us deeper into value territory.

Basically, I that Singapore stocks are cheap, but I think it can get even cheaper. Of course, that isn't very actionable at all. It's like saying the sky is sunny now, but it might rain later. So what? Well, I have been buying into weakness and my average price for the STI ETF is a nice $2.923 per share now. If we continue lower as I am expecting, there will be more opportunity to enter and pull down my average entry price even lower.

Does a bear market lasts 2 months? I don't think so. I continue to hold on tight and sit on plenty of cash.

The Strait Times Index closed at 2998.5 on 9 Oct 2015. Where do you see the index in 3 months?
 
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2 comments:

  1. The poll cannot submit leh

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    1. Thanks Anon, coding glitch, sorry about that :/

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