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Market looks oversold as it is clear that we are expecting tapering and rate hikes to come. Virus concerns have eased too. 

Something strange is going on in the markets. I know Halloween has just passed but no, it has nothing to do with any paranormal activities. It is typical that the Cboe Volatility Index $Cboe Volatility Index(VIX)$ trades inversely with the stock market, however, on Friday, I noticed the US stock market (Dow, S&P500, Nasdaq) closed in the green while the VIX surged higher. In fact, the VIX closed at $16.48 or 6.74% higher. That is unusual.The VIX is known as the market’s fear gauge. Basically the market prices of S&P 500 put and call options are used to calculate the market’s expected volatility in a 30-day time frame. With the VIX surging up, this could reflect that investors want to protect their portfolio and therefore they drive up the pric

Finally the announcement by the Fed has arrived - they will begin to reduce the pace of their monthly bond purchases, a process known as tapering, as soon as late November. Markets are cheering with the major indexes closed at record highs, or should we be? A single key word in the Fed statement caused me some concern. The word is ‘expected’. In their statement: “Inflation is elevated, largely reflecting factors that are expected to be transitory”. “Expected to be transitory”, it can also mean elevated inflation may turn out to be unexpectedly lengthier than what we hoped for, right? And this will have impact on consumer spending and the list goes on. Here is why my view that elevated inflation will persist for some time and we are not out of the woods yet. The world’s second largest econo

easy? Then everyone will be billionaires trading the markets.. it’s not that straightforward..

Everyone is aware of how bearish the global markets are including the US markets, especially today. Nonetheless, let’s consider the thought of premature selling. There are a few key events and outcomes to consider, and look forward to. First, Q3 earnings. We are about a month away from Q3 earnings where banks will kick off the earnings season. Only then we will know whether the stocks current valuation is justified and whether the companies guidance signal a positive or negative outlook. Selling now seems early to me as Q3 earnings season can provide a broader and clearer picture to guide investors decision making. We don’t wish to end up selling quality stocks at a bargain price right now. Second, Fed meetings. Only when the precise timeline of when the Fed is going to taper and by how mu

The S&P500 and the Dow Jones Index had fallen for four trading days this week and the Nasdaq Composite was not spared too, it fell 1.6% for the week. In this situation, it is natural to be tempted to think about selling early to limit more potential losses ahead but also tempted to think about the potential recovery from this terrible week. I like to share here on how I navigate the stormy market weather. First, I try to make sense on the likely factors that are causing the weak week for the broader markets. I think uncertainty sums the factors up nicely. For one, uncertainty about what will be communicated at the upcoming Federal Reserve Sep 21 meeting - the precise timeline when tapering will start and exactly how much will the Fed reduce the pace of asset purchases. Uncertainty abou

Interesting times we are living in, when bad news appears to be good news. Take the disappointing private payrolls number which was just released hours ago. In August, private payrolls rose by 374k which was well off the estimate of 600k. However, judging from the greens in the markets, investors are cheering. The economy may not be growing at an ideal pace which is bad news, but the good news (which I believe from the investors point of view) is that the Fed will continue to support the economy as the Fed noted that there's “much ground to cover” before rate hikes. So the good news amidst the bad news is that we may continue to enjoy accommodative money policies with interest rate hikes off the table for now, which benefits stocks.&nb

I’m sure markets will be on edge in the next few FOMC meetings as talks on taper are inevitable. I think there is more room in the market that is not yet priced in for a taper. Some thoughts. 

Based on history, the next few months are seasonally weak period for equities. The concerns of the potential spread of the highly contagious variant increases downside risk noting that the seven-day average of new daily coronavirus cases was 85,459 as of Monday and news like New York City expecting to require proof of vaccine for indoor dining and gyms may dent positive sentiment and impacting the reopening stocks. With most biggest companies having released earnings and the markets having little reaction along with the upcoming Jackson Hole and FOMC events where the Fed could very well begin discussions on tapering and rates, it is not unreasonable to take some risk off the table and be cautious moving ahead. $S&P 500(.SPX)$<

GDP for 2nd quarter was 6.5%, very much below the estimate of 8.4%. This is not all bad news as the result reflects that we are not at peak growth yet! Confident that we have more room to run and another stronger quarter to look forward to. $DJIA(.DJI)$$S&P 500(.SPX)$$NASDAQ(.IXIC)$