OGT Newsletter (Issue No. 4)
Dated 20th April 2013
As featured in Shares Investment
In this issue, we will be giving a short update and forecast on the S&P and what to expect going into the 2nd & 3rd quarter of the year based on what we see in our technical analysis.
Major economies in the world, mainly Japan, Europe as a whole and U.S. are inflating their economies. By printing money and injecting the money into the economy, some of the money goes into the stock market. Therefore, expect the stock market in their region to go up. But beware of corrections along the way even though the trend is up. Let’s take a closer look at U.S. in detail first.
The major indexes in the U.S. markets have broken all time high recently and it will continue to break all time high for the next 6 months though corrections along the way is possible. Why? The answer is simple. The U.S. is printing money non-stop. All the money printing is used to inflate the economy. The extra money from the money printing is used to inflate the stock market as well. Investors should always look to stay long. The strategy is to buy low and sell high or buy high and sell higher. This is because in a bullish market like this, up to 60% to 80% of companies listed in the stock exchange will see their share prices go up. Going short against such a trend makes the investing game tougher for investors and traders alike.
Our view for next week and the weeks ahead based on our technical analysis is that the S&P index is showing weakness and may break below last week’s low of around 1536. If the S&P breaks below 1536, a correction is likely in place. Traders should therefore look to short the index (through CFDs or the e-mini futures), close off some long positions and even look to go into some short positions. However if this coming week, the index does not break below 1536, there is a chance it may go on to break above the all-time high of around 1597. In this case, investors should still look to hold on to their long positions and even add to their long positions. For counters to go long, investors can look for a short upward movement in counters like Aflac Inc (AFL), Chico’s Fas Inc (CHS), Foot Locker Inc (FL), Lennar Corp (LEN) and Urban Outfitters Inc (URBN). For counters to go short, investors can look to go short on Csx Corp (CSX), E. I. du Pont de Nemours and Co (DD) and Green Mountain Coffee Roasters (GMCR)
As for the Japanese stock market, the same can be said and investor should also look to stay long by buying stock. However, investors should also look to go with the flow of the weakening yen due to the weakening of the yen by the Japanese government. Forex traders should look to long currency pairs like USD/JPY, EUR/JPY and AUD/JPY. But beware of corrections along the way as it is almost due.
The same cannot be said for Europe as the individual countries in Europe are in different stages of economic trouble and because they are near to each other, somehow, one will affect another when in trouble. Help is always on the way through money printing, but as each country has their own agenda, the effect of the money printing will not be the same for them compare with Japan and U.S. Therefore for Europe, it will still be a bit mixed to slightly bullish in our view.
Coming back to the local stock market, property stock counters are set make a momentum upward move in the short term. Counters worth looking to go long for investors should be City Developments and Capitaland. Investors can look to start taking profits after City Developments goes near or above $12.00
On the forex markets, based on our analysis, AUD/USD is almost ready for a upward movement. Therefore traders should look for opportunities to long the currency pair. On the short side, traders should look into shorting the USD/CAD.