Very erratic and busy schedule has kept me mostly quiet in the last couple of months and I will probably keep this way for some time. Just a quick note about what I'm thinking about the market now. You may think I'm out of touch and mind by saying I'm very bullish now. Indeed, the overall sentiment is extremely depressed and almost every talking head at CNBC is discussing how the market may fall apart from here. The market trend is clearly descending and may likely continue. So why am I saying I'm very bullish? Well, it is all about the timeframe. While I'm also very bearish for the longer term, I think the near term trend will be quite bullish. You see, the market has its own mind and it rarely rewards the majority opinion. When everyone steps on the same side of the boat, it will tip over. I think we are at this time point right now. So let me make a bold prediction as a trader: I think in the next few weeks, the overall trend will be going up and S&P may likely go beyond 2000 or even close to 2030 before the short-term bull run is over.
But don't get me wrong. I don't think the market has touched its bottom yet and it may likely plunge again to test the Aug low before this correction is finally over. I think its final plummet may only start when it is over 2000 and when most of the people start to think this correction is over and starts to be quite bullish for longer term into the year end rally. This is likely the time when the market will start to punish as many investors/traders as possible.
At the moment, the market is rather oversold, which has brought down many great stocks with it. For trading purpose, buying some good but beaten down stocks may likely reward you in the short term. Actually the whole healthcare sector has been brutally beaten up so much that I think at least a short-term strong rally is very likely.
The final precautionary word: this is a very fluid and moody market at the moment and it is even very difficult for experienced traders to manage. For most of people, staying at the sidelines may be is the best advice I can give until a stable uptrend is established. You may start to pick up a few shares of good value stocks for long-term but there is a good chance you may find better prices for them in weeks ahead.
Wednesday, September 30, 2015
Thursday, September 17, 2015
One day opportunity for a potential quick gain with gold
There is a good opportunity emerging but it will be gone after tomorrow.
For anyone who are interested to buy some gold at this price, you may do so tomorrow and your position may potentially quickly gain by 6% due to a corporate action.
I'm talking about Central GoldTrust (GTU), which is a Canadian-based closed-end gold trust fund, one of the largest in the world. This is a fund you can trust as it is truly backed up by physical gold. But as a closed-end fund, it can be traded at discount or premium depending on the market mood. So far GTU is at a 5.6% discount to its net asset value (NAV). If you like gold at the current price, this is a good deal since when people start to love gold again some time later, the discount will disappear and likely it will be traded at premium.
Now even a better deal is emerging. The Canadian billionaire, Eric Sprott, is famous for his successful investment in precious metals and according to him, his personal assets are at least 80% tied to precious metals. That shows how strongly he is confident in gold and silver. Sprott has set up an ETF, Sprott Physical Gold Trust (PHYS), which is not only backed up by physical gold but it can also deliver physical gold to investors for their fund units, if they decide to do so. In other words, it is almost like you buy physical gold and save it with PHYS. Because of that, PHYS is always traded at its NAV, equivalent to the spot gold price. Because of that, Sprott think GTU is not a good option for gold investment and is seeking GTU shareholders to vote whether they would like to merge with PHYS or stay as it is. This vote will come at 5 pm tomorrow Eastern. If PHYS is voted for, then the discount on GTU shares will immediately disappear. In other words, GTU share price will suddenly increase by about 6%.
Of course no one knows for sure what will be the vote result but I think the chance is high. Even the worst case when GTU stays as it is, you can still buy it at a discount. I cannot say gold is certainly at the exact bottom but I think it is damn close, if not yet there. Starting to accumulate some gold shares is not a bad idea at all in any case. After all, it is a financial insurance everyone should have.
For anyone who are interested to buy some gold at this price, you may do so tomorrow and your position may potentially quickly gain by 6% due to a corporate action.
I'm talking about Central GoldTrust (GTU), which is a Canadian-based closed-end gold trust fund, one of the largest in the world. This is a fund you can trust as it is truly backed up by physical gold. But as a closed-end fund, it can be traded at discount or premium depending on the market mood. So far GTU is at a 5.6% discount to its net asset value (NAV). If you like gold at the current price, this is a good deal since when people start to love gold again some time later, the discount will disappear and likely it will be traded at premium.
Now even a better deal is emerging. The Canadian billionaire, Eric Sprott, is famous for his successful investment in precious metals and according to him, his personal assets are at least 80% tied to precious metals. That shows how strongly he is confident in gold and silver. Sprott has set up an ETF, Sprott Physical Gold Trust (PHYS), which is not only backed up by physical gold but it can also deliver physical gold to investors for their fund units, if they decide to do so. In other words, it is almost like you buy physical gold and save it with PHYS. Because of that, PHYS is always traded at its NAV, equivalent to the spot gold price. Because of that, Sprott think GTU is not a good option for gold investment and is seeking GTU shareholders to vote whether they would like to merge with PHYS or stay as it is. This vote will come at 5 pm tomorrow Eastern. If PHYS is voted for, then the discount on GTU shares will immediately disappear. In other words, GTU share price will suddenly increase by about 6%.
Of course no one knows for sure what will be the vote result but I think the chance is high. Even the worst case when GTU stays as it is, you can still buy it at a discount. I cannot say gold is certainly at the exact bottom but I think it is damn close, if not yet there. Starting to accumulate some gold shares is not a bad idea at all in any case. After all, it is a financial insurance everyone should have.
Sunday, September 13, 2015
Where to park your money now?
Everyone knows that the stock market is extremely volatile at the moment and this may continue for a while. I still believe the current correction is not done yet and more downside is still ahead of us. In this situation, the market is controlled by extreme emotional swings more than anything else. It is definitely not a market for most investors and traders I suppose. Yes, it is a traders market but even for experienced traders, it is not as easy as at usual times. There are simply too many "emotional black swans" that can easily derail any technical trending. So for most people, holding cash is a better option until the market starts to stabilize. The million dollar question is where to park your money safely now?
Well, simply keeping cash is definitely the safest option that no one else can beat it. But of course you are virtually paid for nothing. If you can tolerate a little bit risk, preferred stocks (PS) may be a good alternative for you. If you are not familiar with PS, see my previous blog about its concept. While you can pick individual PS if you are savvy about it, there is an easy way to buy an ETF, PFF (iShares US Preferred Stock), which has done the ground work for you with a group of PS shares. As you can see below, PFF (blue) is quite stable compared with S&P index (red), especially during market turmoils like the mini-crash we saw recently. The purpose to buy PFF is of course not for capital gain (similar to if you are saving your money in the bank) but rather to earn its nice dividends (6%) while still keeping your money relatively safe regardless how the market goes. Now is a good time to buy some preferred stocks as part of your cash management, I think.
Well, simply keeping cash is definitely the safest option that no one else can beat it. But of course you are virtually paid for nothing. If you can tolerate a little bit risk, preferred stocks (PS) may be a good alternative for you. If you are not familiar with PS, see my previous blog about its concept. While you can pick individual PS if you are savvy about it, there is an easy way to buy an ETF, PFF (iShares US Preferred Stock), which has done the ground work for you with a group of PS shares. As you can see below, PFF (blue) is quite stable compared with S&P index (red), especially during market turmoils like the mini-crash we saw recently. The purpose to buy PFF is of course not for capital gain (similar to if you are saving your money in the bank) but rather to earn its nice dividends (6%) while still keeping your money relatively safe regardless how the market goes. Now is a good time to buy some preferred stocks as part of your cash management, I think.
Update on SBUX and BIDU
I talked about SBUX and BIDU before with bearish view and they did faltered quite a bit even before the market crash. I happened to take a look at both charts today and thought to share with you what I'm thinking about their near term trend.
Of course, right now the market is more controlled by extreme emotions than anything else. As such, technicals are not always as reliable as used to be at usual time. Some little black swan can easily turn things around either way. Then, next week FED’s move is a big unknown and it can cause huge swings either way. So take my technicals with a grain of salt.
Unless FED is totally a negative for the market, in the near future the market may be quite bullish for a couple of weeks before getting another crash to test its Aug low below 1900. In this context, SBUX is shown technical strength and there is a good chance it may first challenge $58 and then $59. If my technical is correct, it may likely not go beyond $59, but will come down again with the overall market.
Regarding BIDU, it may likely fluctuate around current level $144. But pay attention to $152 as it is showing some technical strength as well now. If it can definitely break out above this level, then it will easily go up to $160 and then to around $170 if the overall market is supportive. But again, chances are it may not likely go too much before $170 in the near term.
Of course, right now the market is more controlled by extreme emotions than anything else. As such, technicals are not always as reliable as used to be at usual time. Some little black swan can easily turn things around either way. Then, next week FED’s move is a big unknown and it can cause huge swings either way. So take my technicals with a grain of salt.
Unless FED is totally a negative for the market, in the near future the market may be quite bullish for a couple of weeks before getting another crash to test its Aug low below 1900. In this context, SBUX is shown technical strength and there is a good chance it may first challenge $58 and then $59. If my technical is correct, it may likely not go beyond $59, but will come down again with the overall market.
Regarding BIDU, it may likely fluctuate around current level $144. But pay attention to $152 as it is showing some technical strength as well now. If it can definitely break out above this level, then it will easily go up to $160 and then to around $170 if the overall market is supportive. But again, chances are it may not likely go too much before $170 in the near term.
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