Why I am bullish for the next few months until the US November election.

16 April 2016

 

Dear Investor,

 

I would like to congratulate those who registered for our Asian Market Conference to be held on Saturday 23 April from 9 AM to 1 PM at the Istana Hotel.  We have 4 prominent fund managers who will share their insights from Hong Kong, Thailand, Singapore and Japan.  

 

There is no charge. For more info and registration details please visit my blog or contact me.

asianequity.blogspot.com

 

A major profit principal of successful investors understands the background.  Are we investing during signs of weakness or signs of strength?  

 

These signs can be fundamental as well as technical.

 

A fundamental sign was revealed last week. It happened with the Chinese Yuan.

China is the dominant force behind Asian equity investing.  What happens in China effects markets worldwide and particularly Asia?

 

George Soros is described by the Chinese PM as a giant crocodile whose main reason for being is to devour weak prey. Soros lost some of his flesh in the last 3 months as China is a bigger crocodile.  

 

Soros and his hedge fund friends bought USD 8 billion of put options   on the Yuan betting that the Yuan would collapse against the US Dollar. A put option is a bet on price decline. Soros lost big time as the options expired worthless and the Yuan strengthened.

 

Soros also bet that Asian currencies would also decline and Asian stocks would collapse. He was wrong again.

As Asian markets have recovered from their January losses, foreign funds have been heavy equity buyers across the board. Asian currencies including the Ringgit have also recovered to fund purchases of Asian equities and bonds.  

 

 

Weekly Straits Times Index from January 2016 to present.

Notice the underlined price bars after the 1000 point sell down. It took 6 weeks to absorb the selling as shares were taken up by strong hands. One fund manager joked that Singapore sentiment was so bad some traders thought Singapore would sink into the sea!  

 

The Straits Times index has recovered 394 points as of Friday 15 April.

 

This is a classic Volume Spread Analysis pattern of sign of strength (SOS) that happens after a major liquidation/ panic selling. Notice the narrow range bars on moderate volume and the building of support and then a major line break on high volume and wide price spread.

 

Signs of strength tend to persist.  If you look at the other Asian markets including the KLSE there are also signs of strength and that is why I am bullish for the next few months until the US November election.

 

Invest well and grow your wealth,

Bill

 

 

 Xing Xing, is a giant panda living at Zoo Negara enjoying some bark. He is on loan from the China Gvt for 10 years; Xing Xing means prosperity and the Chinese being a major trading partner to Malaysia and Asia should bring us prosperity. If you have time I highly recommend you visit Xing Xing. The best time is during the weekdays as there are fewer crowds

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