Market rebounded today during Obama's state of union speech this morning. While Obama pledge to stabilize and grow the US economy is positive (I mean what else can he say), I think the crux of the whole speech is that he is NOT declaring war on the banks, and he just want to ensure that the US economy is sheltered from huge systematic risk.
After the strong populist rhetoric on whacking the US banks last week, today statement definitely sounds much milder and take some load off the negativity surrounding the uncertainty of what exactly his government intend to do to clamp down risk taking among banks.
Note that Davao economic forum is also on-going with most banking honcho denouncing any restriction on such clamping move and noted the limited effectiveness if it is not coordinated internationally (which is difficult if not impossible).
The market has an almost instantaneous effect when O Ma Ma took on a milder stance, as the market stage on a good TECHNICAL REBOUND.
Is the selling over? I think most of the selling is done (in fact over done). Margin call n force selling should end by today if any left...hence the market should stabilise from here.
Will the price go up? There will be technical rebound. Many Blue chip counters still have got some gaps to fill, but this could take time.
Will it go down again? I believe prices hereon will be volatile as the market seek out news for direction amid lack of fresh news.
Should I cut loss? If you din cut over the past few days, you are already a brave soul. As I said most force selling should be over. Price should stabilize from here, at least for the short while.
Should i buy to cover my loss? You buy to make money, not cover your loss! If you want to bargain hunt, you better be able to hold. At the same time, practise tight stop if the market move down again. In the mean time, look for good stock with fundamental. For the long run, I believe the forward PE ratio still looks good for Asia.
Can I buy US stock? Note that US market will stay in the doldrum and US banks will stay under pressure for awhile. Be prepare to sit out.
Commodity story is over? Personally I do not think so. Some correction is inevitable thou, but to start off with prices are not overly high to start off with (minus gold and silver lar!).
Is the coast clear? I dun know, but most negative news are already out. So at least for now...I think the heavy sea should be calmer....for now, I hope.
This commentary was send out to my client on Thursday morning during the state of union speech. Apologize for being late here.
This blog is a selections of my investment views to my client. If you find it useful or have additional information to share, please do let me know. These blogs are my personal views and is not meant to solicit any sales or investment on any securities or investment. I may have vested interest in some of the counters or investment products, hence please invest at your own risk. As usual invest in what you understand and do your own homework as usual.
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