Equity Thoughts : Gappy Markets To End The Year In Tears.
An old Nikkei daily candlestick chart.
Notice the huge gaps in the opening and closing levels throughout the year.
It is mostly the same for the rest of the liquid Asia markets too.
Look at the Hang Seng this time round.
People are bottoming fishing the Hang Seng now. Thinking that such a drop means that a rebound is imminent once the protestors have been tear gassed away and the status quo resumes.
They are unaware that the global trend is on a massive tear with currency markets on huge reversals back to their 5 year lows against the USD.
This says a lot about valuations and hot money flows and typically, stocks are the last to be affected.
The S&P buybacks are showing signs of cooling after a record amount of shares repurchased by companies on easy credit in bond issuance binges.
http://blogs.wsj.com/moneybeat/2014/09/23/buyback-binge-takes-a-breather-2/
S&P Index vs S&P Buyback Index
Even equity fund managers like Blackrock are lamenting the record bond issuance stock buyback model. http://www.zerohedge.com/news/2014-09-23/blackstone-slams-broken-bond-market-despite-record-bond-issuance-driven-stock-buybac
And high yield bonds continue to be dumped as real estate prices start to flounder which brings the entire asset inflation model into question as we pointed out in May this year. https://tradehaven.net/market/the-feds-job-is-done-inflated-our-way-out-of-debt/
In August, we asked if we are there yet. https://tradehaven.net/market/equity-tuesday-are-we-there-yet-markets/
And it looks like this now for the quarterly closes.
Hang Seng Index quarterly performance
S&P 500 Index quarterly performance
The Hindenburg Omen we pointed out last week is still in play for the next few weeks. https://tradehaven.net/market/equity-thursday-er-we-have-2-hindenburgs-thank-you-baba-us/
Anticipating market reaction, I would expect investors to pour their life savings into blue chips now and the USD which would be a tad too early and we will probably end the year in tears.
Dow Jones Industrials Blue Chip Index quarterly chart.
Yes. I think we can see 3,000 for the STI this time.
STI Index monthly graph.
Then you can start shopping for the dividend yields.
And I am totally un-bullish REITS at the moment with the FTSE Singapore Reits Index giving an average dividend yield of 5.71% and stocks dividends looking to catch up at 3.27%.
Good luck.