Dec 9th 2014 – Asian Markets Can Be Scary
Holy China!! The Shanghai market crashed a whopping 5.31% overnight causing panics in world markets, that’s equivalent to the Dow Jones going down 900 points…and that was not the worst market hit, Argentina went down 7.5%!
So, despite the best of efforts around technical analysis and forecasting, sometimes panic ensues, as is the nature of man. I have also seen this kind of volatility in Japan in the recent past, it is nothing short of extraordinary. I am glad I choose to invest in a market place that isn’t subject to such insane swings on a regular basis.
Despite the panic, I am reminded of the age old investor philosophy: ‘To keep our heads when all others around us are losing theirs’. The amazing recovery means I still have no sell orders in place for tomorrow morning. I am absolutely delighted with my hall from the October lows and I will look forward to taking my profits soon, perhaps after the Santa rally I’m expecting.
It is still my firm belief that this was a counter trend move caused by a short term fear driven overreaction and we will have higher prices again before too long leading up to Christmas. So bring on more dip buyers; a recovery is almost guaranteed in Asia overnight tonight, possibly helping push on the US market tomorrow.
Additionally, from a candlestick point of view, the market action today has caused a very bullish candle to close, showing the high probability of higher prices again tomorrow.
Market News:
U.S. stocks ended mixed on Tuesday, with the Nasdaq Composite rallying back from stiff losses, as investor concern about the global economy ebbed.
Tuesday’s drop had “not much to do with what is going on in the states, there is no shift in fundamentals,” said Peter Cardillo, chief market economist at Rockwell Global Capital.
Another market analyst said investors more worried about the dearth of data to support the notion that lower gasoline prices are translating into increased consumer spending during the holiday shopping season.
Whole inventories rose 0.4 percent in October versus expectations for a 0.1 percent gain.
Another report Tuesday had small business optimism rising in November to its highest level in almost eight years.
The Shanghai Composite Index tanked more than 5 percent and gold jumped 2.9 percent as investors sought a safe haven.
Moving to propel local governments from using hazy financing instruments to raise funds, China stepped up its efforts at creating a more transparent municipal bond market.
Wednesday:
Earnings: Costco, Hovnanian, Toll Brothers, Lands’ End, Vera Bradley, Men’s Wearhouse
1:00 p.m.: $21 billion 10-year note auction
2:00 p.m.: Federal budget
News Sources: CNN Money & CNBC