Tuesday, May 5, 2009

The Day After 17000

The rise is technically confirmed. I will not be surprised if HSI surged to 17,000, or even to 18,000. In fact, Mr. Kan's prediction of "over 21,000" under the existing rise can even be achieved (imagine each day rises by 800pts; only takes 6 trading days to cover 4800pts).
Yet, what will happen after the rise? Please pay attention to the followings:
  1. Interestingly, when the stock market was at the down side and economy was declining, analysis like "stock market led economy by half a year" circulated everywhere.
  2. But according to the recent movement, investors, in general, reacted upon the GDP consumer spending, ISM mfg, PMI, and pending home sales, that were all economic figures of March or April at the very best.
  3. The Mortgage Rate in fact increased. 30 Year Fixed was 4.94%, a recent high for 3 months. The others are the same.
  4. The layoffs on various corporates, including commercial banks, continue. It include not only investment banking departments but also commercial banking, private banking, and wealth management.
  5. The TED maintains at the level as last week and last month at 82 basis points spread.
  6. BDI maintains at 1400-1800 level after the rebound from 8xx to 2xxx.
  7. While the HSI futures options have shown influx to 17000, 17200, and 18000 call; another influx to 14400, 13600, and 12000 put are also shown.
  8. The selling of stockpiled inventory at low cost will be reflected on Q2.
  9. FED injection of fund has recorded a negative figure for 2 weeks ago.
Economy cannot decide how the stocks will be speculated but it can decide how much money people can spend and bet on eventually. Money influx is the key of this rebound. No influx, no rise.

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