This analysis is based on a talk by a speaker from T3B Singapore.
The speaker has many years of experience in stock market trading and applies Cycle Analysis (CA) to predict and time his trades.
Look at the chart of crude oil from 2008 to 2016:-
In the crisis year of 2008, crude oil dropped from high of US$147+ and fell to US$33+
calculation: @147/2 = 73 and 73/2 = 36
That year, crude oil rebounded from $33+.
In the current crisis, last high was US$107+
calculation: @ 107/2 = 53 and 53/2 = 26
So we expect crude oil to start rebound once dropped to US$26+
Maybe possible?
(B) U.S market next wave direction
The last bear market of 2011 refers. That year was the beginning of European sovereign debt crisis, started with Greece (following the 4 of P.I.G.S)
Look at S&P500 chart last 6 years >
First see the circle over the period of 2011 and compare it to the other circle in end 2015 to current.
The speaker's forecast is that there will be a rebound in the month followed by a further low before bottom out by the end of 1st quarter 2016. After that will be a strong bull again.
Possible?
(C) USD index
In the Asian financial crisis of 1997, USD was very strong against most currencies of the world.
Look at the following chart of USD index since 1997:-
In 1997 crisis, USD strengthened against all currencies. USD also strengthened again in 2011.
This time around, USD will continue to strengthen until end 2016 before retracing next year.
According to the speaker's idea, when crisis looms in other parts of the world, money will flow to US like in 1997 Asian financial crisis. This inflow strengthens USD.
This time, money again flows to US to buy up more stocks (hence US market will be bullish in the next quarter).
Not sure to agree to his idea?
(D) China
Mr Fang Xinghai, vice-chairman of the China Securities Regulatory Commission, said in the World Economic Forum in Davos, that:-
"China's IPO total capital raised was the highest in the world in 2015"
"Ford, which isn’t the biggest car manufacturer in China but still sold 1.07 million cars last year."
In 2015, Chinese companies accounted for the largest share of IPO proceeds raised globally, followed by the US.
"Any significant development in China will impact the global economy, but let’s not forget that the Chinese economy still grew by 6.9% - hardly a collapse."
Christine Lagarde said @ Davos World economic Forum
When the oil price come down, those that are in the upstream which is exploration are facing a gloomy future. With the low crude price, many are unable to cover their costs when the oil price fell to US30.56 which is the bench mark for zero profit by studies. As for we malaysian, our national Petronas oil Carigali will go thru a period of hardship which is no benefit and cause more harm to our country because we are one of the oil producer. While the downstream, which is the refining shall benefit from the low crude price. As we can see that PETRONM stock price has rose up 2X since the drop of crude oil price.Next will be Shell Malaysia, which is been acquire by a China oil company with a predominant low price. Once all are done, there will be some significance up in price.
ReplyDeleteThe next question is how come the refiners are making money while those explorer whom took oil from the ground or sea are not making money?
ReplyDeleteA couple of years ago when the crude price was high above US100 per barrel, the upstream was making money while the downstream (refining) was facing a tough time. This is because the refiner had to buy the crude at high price and sell their end product with control price. But since the fell of crude price which is more than 70% discount, the cycle has come for the refiners to make profit.
In general just like a roti canai seller whom use to buy his raw material, the flour at RM10/kg and sell his roti canai at RM1/pc. Out of sudden the flour price plummeted to RM3/kg which is 70% discount and of course the roti canai price shall not drop to 30 sen/pc, perhaps a slight drop to 80 sen/pc due to various reasons and excuses like inflation. It is at this point the roti canai seller reap the highest profit.The same applied to those refiners.
Brent crude was down 31 cents at $31.87 per barrel after settling down $1.21 in the previous session. It had climbed to $32.83 a barrel in early trade on Wednesday.
ReplyDeleteBest accurate stock tips