Equity Thoughts : Gappy Markets To End The Year In Tears.

An old Nikkei daily candlestick chart.

nky gaps

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.

hsi index gaps

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/

SPX BUYBACK INDEXS&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/

TAPER DOES NOT MATTER ANYMOREIn 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.

HSI QUARTERLYHang Seng Index quarterly performance

spx quarterlyS&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.

DJ INDEX QUARTERLYDow Jones Industrials Blue Chip Index quarterly chart.

Yes. I think we can see 3,000 for the STI this time.

fssti monthlySTI Index monthly graph.

Then you can start shopping for the dividend yields.

STI DIVIDEND YIELD

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%.

sgreits dividends

Good luck.