A Few Ideas for the Next Week Ahead

#1
Hi,

I like to share some ideas which are going through my mind, what will happen in the next few weeks. From the Indian point I guess with key elections in front of the door like WB and TN nothing much in the budget will happening, poor governance with no vision is all what will come up and that's no surprise to everybody, so the market is my guess will start on Monday after with business as usual.

Most of us will hope, that the worst weeks are behind us and scams and useless policies are already included in the prices, maybe the one or other individual stock will still get some beating, but all over that should be taken care off.

But will this be enough to start a new rally? I have my doubts, sure we will see some short term reactions like in the past couple of weeks, but will this be enough to turnaround in an uptrend? For the help of FI's I think we can wait for some time, today come in tomorrow go out and next month come back is not really how it works, because what has changed fundamentally? Nothing, except the prices have come down, so my guess is we can kiss a goodbye to this chapter for quite some time, the first push needs to come from inside before FI will follow later.

So the situation has changed and 1.6 Billion USD will not come back in the market so soon, which means it will take most likely some more time, step by step, but now do we have this time?

I certainly feel that we need to look carefully over the ocean. The DOW is at almost 12.500, that is quite something from it's all time high of 14.000 in 2007 but only 500 points from the start of the crisis in 2008. Obama is unlikely he get his budget approved in the congress before spring, by May will we the deadline, after it would be a disaster. This is not likely to happened, but it is hanging over the market and on a market on this high, with an economy which is outperforming, this is psychological dangerous to the markets. The FTSE 100 is already at 6300, only 200 points below 2008, the air is getting thinner.

And than there is middle East, which could affect India as well. The turmoils are spreading, the entire area is historical changing. Tunisia and Egypt are the beginning, but what happens if it spreads to the real big guys, like Saudi, Kuwait or Iran? Then the oil prices will go through the roof. Already know since the beginning of the turmoils the Brent is gone over 100 USD and still stands there. The US are not using Brent, they use WTI, which currently is traded lower at 85-90, but sooner or later the prices will follow, in which ever direction. With an increase of WTI of 25% to let's say 110, it could reduce the GDP of 1% in the US and that will certainly change the markets. Up to now the tanks in US and Europe are full and the warnings are ignored, nerveless they are real. And in India an oil price of 100+X will certainly add to inflation, our real poison along with corruption. How long the government can hold the petrol prices on the low level, may be a couple of months certainly not longer, but the turmoils in the middle East have just started, they are certainly not over in a few weeks. Egypt revolution ended peacefully, but are the prices for oil came down? It's more likely it will stay their for some more time and prices are never standing for long isn't it?

Commodities like copper are already 20% up of the 2008 level, Silver 30 years high, Cotton or Rubber you name it, high and higher.

Like you I will also pick up some stocks at these price levels, but I feel this level could not be the end. Yes, some reactions are normal and always welcome, but I expect not a very sharp reaction, more like a step by step reaction, 2 steps up 1 step down, in the meantime we need to watch out like I said, if the bears are reaching Wall Street - we are not living on Island, like many bankers have told us in 2008 for very long time, than it would be very difficult to come from an natural reaction in a rally to make the last weeks.

Looking backwards it was like always it was, Nov 21000, than normal reaction down than start again and failed the 21000, suddenly everything was bad, inflation - like we never had any before, scams - like they were not known, 2G was already so old we forgot about it etc. Hit a low at 17500, reaction to 18500 and got a kick on Friday, now the shaky starts again, was this reaction strong enough to go through or will it be blown off? The answer we will see in next 10 days, if it's not going below 5200 or 17500 well and good than we can look slowly forward, otherwise better act on it.

But in one think the great talkers from 2008 are now correct, India is an Island, everywhere the markets are only going up, only here we are down! And the question is are the international markets going for new highs - then we should also be fine, but if not, than internationally the reactions are starting and will add lots of pressure to our markets, before we come up in a strong rally, where at that time we don't want to listen to the bad news.

My 5 cents is, we need passions, don't think because one stock is gone up 5% we miss the train, nothing like that I'm telling you, I would prefer to go in heavily if thinks going fine, than rather now if a lac in a stock and can't sleep most of the nights. Step by step, is my idea, will do. No big risks, don't get confused with small reactions, for a good rally quite more is required.

Wish all a nice weekend
Andre
 
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#2
Dear Friends,

I just read an article from the New York Times from Wednesday, saying Gaddafi has hired over 4000 soldiers from all parts of Africa.

So anybody who has the idea that this crisis in Libya could have an peaceful and soon ending like Egypt might consider thoughts.

Oil prices are might going up further with a scenario of a possible guerrilla war in Libya.

Hope I'm wrong,
regards
Andre
 

Atiker

Active member
#3
I just read an article from the New York Times from Wednesday, saying Gaddafi has hired over 4000 soldiers from all parts of Africa.

So anybody who has the idea that this crisis in Libya could have an peaceful and soon ending like Egypt might consider thoughts.

Oil prices are might going up further with a scenario of a possible guerrilla war in Libya.
I am concerned about thousands of Indians stuck there.
 
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