Our markets have been whipsawed by multiple events, such as rising inflation expectations and bond yields, protectionism (for e.g. Trade tariffs), upcoming FOMC meeting and sudden key personnel changes in the White House etc…
How should we react or trade in current market conditions? Let’s take a look at the market events and the indices’ charts…
5 observations on the market
-
Fed Chairman Jerome Powell’s first FOMC meeting tonight. A 25bps rate hike is almost certainly expected but markets will be scrutinising what the new Fed Chairman will be saying during the conference;
-
Based on an article on Washington Post, President Trump may announce tariff package against Chinese products amounting to US$60b by tomorrow (click HERE). This is an event risk which i will try to avoid as depending on the actual tariff announced, the short term impact to the equity market is not clear;
-
The crisis engulfing Facebook continues to deepen and unravels (click HERE). It may have wide ranging implications (click HERE);
-
U.S. Politics continue to grab the limelight with some noteworthy personnel changes, such as the removal of Secretary of State Rex Tillerson, departure of economic adviser Gary Cohn etc. In fact, based on an article published on National Public Radio Inc (click HERE), in the first 13.5 months of President Trump’s term, 43% of the top level personnel in the White House have moved. This was more than his four most recent predecessors had after two years.
-
Although I am not an economist, I believe U.S. 10 year bond yields are likely to continue their climb unevenly in the course of 2018. In other words, there may be periods where the 10 year bond yields may surge in a short span of time which may pressure equities.
Indices’ outlook 20 Mar 18
S&P500 closed 2,717
Based on Chart 1 below, S&P500 seems to be stronger than Dow as
-
In the recent rebound, S&P500 has reached the high last seen on 27 Feb 2018;
-
20D exponential moving average (“EMA”) has not compressed with 50D EMA, thus, there is limited risk of death cross formation at this moment;
However, it is noteworthy that 20D EMA seems to be turning down. Amid negatively placed directional indicators (“DIs”), ADX has been sliding and closed at 20.0. Indicators such as RSI and MACD are weakening. MACD has done a negative crossover. Given that S&P500 has broken 2,743, the overall chart is a tad negative. However, S&P500 should find good support around 2,662 – 2,685 in the near term. A sustained break above 2,802 is bullish for the chart.
Near term supports: 2,695 – 2,703 / 2,685 / 2,677 / 2,657 – 2,662
Near term resistances: 2,725 / 2,735 / 2,743 / 2,763
Chart 1: S&P500 – a tad negative after breaking below 2,743
Source: Chartnexus 20 Mar 18
STI closed 3,513
STI staged quite a good recovery yesterday. Amid negatively placed DIs, ADX has slid to 13.2, i.e. This likely indicates that our market may trade sideways in the short term. Barring any significant positive, or negative events, it is likely that STI may continue to trade within the range 3,444 – 3,555 with slightly >50% odds of going to the lower end of the range.
Near term supports: 3,504 – 3,507 / 3,488 / 3,475 / 3,464 / 3,450
Near term resistances: 3,515 / 3,540 / 3,552 / 3,568 / 3,576
Chart 2: STI may trade in the range 3,444 – 3,555
Source: Chartnexus 20 Mar 18
Conclusion
After considering the above outlook on the indices, as well as the aforementioned market observations and coupled with my short term trading mentality (my typical holding period is a couple of weeks to a few months for most of my positions), I remain cautious on the market and will not be overly exposed to stocks at least in the next few days. I am currently only around 43% invested but can raise to >100% with the use of leverage (i.e. CFDs). My *personal trading plan (subject to change) is as per follows:
-
I may accumulate blue chip stocks which are extremely oversold, or short them, if they are extremely overbought;
-
I may accumulate small mid cap stocks with potential near term catalysts on weakness;
-
I may switch out some of my stocks to enter other stocks, should opportunities arise.
*Naturally, my trading plan will not be suitable to most people as everybody is different. Readers / clients should exercise their independent judgement and carefully consider their percentage invested, returns expectation, risk profile, current market developments, personal market outlook etc. and make their own independent decisions.
Readers who wish to be notified of my write-ups and / or informative emails, can consider signing up at http://ernest15percent.com. However, this reader’s mailing list has a one or two-day lag time as I will (naturally) send information (more information, more emails with more details) to my clients first. For readers who wish to enquire on being my client, they can consider leaving their contacts here http://ernest15percent.com/index.php/about-me/
P.S: Do note that as I am a full time remisier, I can change my equity allocation fast to capitalize on the markets’ movements.
Disclaimer
Please refer to the disclaimer HERE
Very good article post.Thanks Again. Fantastic.
Really enjoyed this article post.Really thank you! Cool.
Fantastic blog article.Really thank you! Keep writing.
Really appreciate you sharing this article. Awesome.
I really enjoy the article post. Fantastic.
Looking forward to reading more. Great article.Really thank you!
Very informative article post. Awesome.
Great blog article. Great.
Really informative blog post.Really looking forward to read more.
Thanks for sharing, this is a fantastic post. Cool.
Enjoyed every bit of your blog post.Thanks Again. Really Great.
Say, you got a nice article. Keep writing.
I cannot thank you enough for the blog article.Thanks Again. Awesome.
wow, awesome blog post.Much thanks again. Really Cool.
Very neat blog.Really looking forward to read more. Want more.
Thanks so much for the blog.Really looking forward to read more.
Thanks for sharing, this is a fantastic blog. Great.
Im obliged for the blog.Much thanks again. Awesome.
I am so grateful for your blog article.Really thank you! Fantastic.
Major thankies for the article post.Thanks Again. Awesome.
Major thankies for the blog.Much thanks again. Much obliged.
Very neat blog article.Much thanks again. Cool.
Looking forward to reading more. Great blog post.Really looking forward to read more. Really Cool.
A big thank you for your blog.Much thanks again. Fantastic.
Im grateful for the article.Thanks Again. Really Cool.
Im obliged for the blog post.Really thank you! Cool.
Fantastic blog.Thanks Again.
Enjoyed every bit of your blog.Really thank you! Really Great.
I cannot thank you enough for the blog.Really thank you! Much obliged.
Muchos Gracias for your blog.Really thank you! Great.
Say, you got a nice blog.Really looking forward to read more. Much obliged.
I really enjoy the blog article.Really looking forward to read more. Great.
This is one awesome blog post.Thanks Again.
I truly appreciate this post.Much thanks again. Will read on…
Im grateful for the post.Much thanks again. Awesome.
I really liked your blog article.Really thank you! Awesome.
Thank you ever so for you blog article.Much thanks again. Keep writing.
I am so grateful for your blog.Really thank you! Cool.
I value the blog post.Much thanks again. Really Great.
I really enjoy the blog.Really thank you! Will read on…
Muchos Gracias for your blog.Thanks Again. Much obliged.
Really enjoyed this blog.Really looking forward to read more. Want more.
I cannot thank you enough for the blog.Really thank you! Great.
Say, you got a nice blog article.Really thank you! Fantastic.
Really informative blog article. Much obliged.
Very informative blog post.Thanks Again. Want more.
Awesome article post.Really thank you! Awesome.
Fantastic article post.Thanks Again. Much obliged.
I think this is a real great article.Really looking forward to read more. Awesome.
Thanks so much for the blog article.Thanks Again. Really Great.
Thank you ever so for you article.Really looking forward to read more. Will read on…
wow, awesome blog post.Really thank you! Really Great.
A round of applause for your post. Want more.
Great article post.Really looking forward to read more. Want more.
Thanks for sharing, this is a fantastic article post. Really Cool.
Really informative blog post.Really thank you! Keep writing.
Thanks-a-mundo for the post.Thanks Again. Great.
Very good blog.Really thank you!
Major thanks for the blog article.Thanks Again. Keep writing.
I appreciate you sharing this blog article.Really looking forward to read more. Really Cool.
Muchos Gracias for your article post. Really Cool.
Im grateful for the blog.Much thanks again. Really Great.
Great blog post.Really thank you! Keep writing.
I really liked your article post.Much thanks again. Really Great.
Thanks for sharing, this is a fantastic article post.Really looking forward to read more.
I am so grateful for your blog.Much thanks again. Fantastic.
Say, you got a nice blog post.Much thanks again. Much obliged.
I really like and appreciate your article.Much thanks again. Fantastic.
Hey, thanks for the blog.Really looking forward to read more.
I think this is a real great article.Thanks Again. Will read on…
Hey, thanks for the article.Much thanks again. Awesome.
Major thankies for the article post.Really looking forward to read more. Really Cool.
I truly appreciate this article post.Much thanks again. Much obliged.
I loved your blog.
wow, awesome blog.Really thank you! Fantastic.
Im thankful for the article post.Much thanks again. Much obliged.
Very informative article.Thanks Again. Keep writing.
I loved your post. Fantastic.
I truly appreciate this blog article. Fantastic.
Thank you ever so for you blog article.Really looking forward to read more. Fantastic.
Im thankful for the article.Really thank you! Awesome.
Really enjoyed this blog.Really looking forward to read more. Fantastic.
Thanks again for the article. Will read on…
Great, thanks for sharing this blog article.Much thanks again. Really Cool.
Wow, great article post. Awesome.
Very neat blog article.Really looking forward to read more. Much obliged.
Thanks for the article post.Much thanks again. Great.
I value the article.Much thanks again. Cool.
Thanks for sharing, this is a fantastic blog. Will read on…
Thank you ever so for you article. Great.
Very good blog post.Thanks Again. Want more.
Thank you for your blog post. Want more.
Very informative article.Thanks Again. Really Great.
I really like and appreciate your post.Much thanks again. Fantastic.
This is one awesome blog article.Much thanks again.
Very neat blog.Thanks Again.
I really enjoy the blog post.Really thank you! Great.
Fantastic article post.Really looking forward to read more. Want more.
A round of applause for your blog.Much thanks again. Fantastic.
Thank you for your blog post.Much thanks again. Great.
I think this is a real great article.Thanks Again.
Really enjoyed this article post.Really thank you! Really Great.
Major thankies for the article post.Much thanks again. Much obliged.
I cannot thank you enough for the article post.Much thanks again. Want more.
A round of applause for your blog.Much thanks again.
This is one awesome article.Really thank you! Will read on…
Wow, great blog post.Really looking forward to read more.
Thanks-a-mundo for the blog post.Much thanks again. Really Great.
Thanks so much for the blog post.Thanks Again. Cool.
Really appreciate you sharing this post.Really looking forward to read more. Really Cool.
Thanks-a-mundo for the blog post.Really looking forward to read more. Keep writing.
Great, thanks for sharing this article post.Much thanks again. Keep writing.
Awesome article post. Really Cool.
Very neat article post. Cool.
Thank you for your blog. Will read on…
Awesome blog article.Thanks Again.
Muchos Gracias for your blog post.
Really enjoyed this blog.Much thanks again. Much obliged.
Really enjoyed this article.Really looking forward to read more. Really Great.
A round of applause for your article.Much thanks again. Cool.
Thanks for the blog.Much thanks again. Will read on…
I really like and appreciate your blog post.Much thanks again. Keep writing.
A big thank you for your blog. Fantastic.
Appreciate you sharing, great blog post.Really thank you! Awesome.
Thanks-a-mundo for the post.Really looking forward to read more. Want more.
Muchos Gracias for your article.Much thanks again. Awesome.
Thanks so much for the post.Really looking forward to read more.
Enjoyed every bit of your blog.Much thanks again. Much obliged.
Im grateful for the blog.Really looking forward to read more. Want more.
Muchos Gracias for your article.Really thank you! Want more.
I think this is a real great blog.Much thanks again. Want more.
Im obliged for the blog article.Thanks Again. Great.
Thank you ever so for you blog.Really looking forward to read more. Will read on…
Thank you for your blog article.Really looking forward to read more. Awesome.
Very good blog.Really thank you! Much obliged.
Im obliged for the blog article.Really looking forward to read more. Great.
Very good article post.Much thanks again. Keep writing.
Wow, great post.Much thanks again. Want more.
Thanks for sharing, this is a fantastic blog.Really thank you! Cool.
Im grateful for the blog post. Cool.
I loved your blog.Thanks Again. Fantastic.
Very good blog article. Keep writing.
Thanks for the blog post.Much thanks again. Really Cool.
Say, you got a nice article post.Much thanks again. Cool.
Thanks again for the blog.Much thanks again. Keep writing.
I really enjoy the blog.Thanks Again. Awesome.
Really enjoyed this article post.Really thank you!
Major thanks for the article post.Thanks Again. Really Great.