Market trend

What a week it has been. I saw my profit shrink from 6% high to as low as 2.3% in 3 weeks! Many a times I told myself that I should kick myself in the butt for not letting go when the STI cross the 200MA mark. By theory, we should let go. But I didn’t and watched my profit decrease day by day because of the problems in Greece.

The reason why I did not let go any of my stock is because:
1) the economic impact of Greece to the world economy is so little.
2) The EURO group will definitely save them as they are all in the same boat. The big power house like Germany and France are still doing well.
3) The Asia economy is still expecting 5-9% growth. Singapore is expecting 5+% this year. Very robust.

Good thing I was half right… my margin when back to 4.5% and expecting to go a little bit higher in the next week.

The bigger impact I feel is the uncertainty of the US debt limit discussion by Aug 2nd. If the US congress does not allow the increase of debt level, it will have “catastrophic economic and market consequences” as quoted by Timothy Geithner. Essentially the US government will run out of cash to pay their soldiers and public workers.Plus Standard & Poor’s would lower the U.S. credit rating from AAA to D — its lowest rating. That is a scary scenario. Not the Greece one.  But because this is one of those “too big to fail” situation, I think they will ultimately pass it. Again like Greece, they have no choice.

So I am predicting that there will be turmoil in the market prior the Aug 2nd deadline and once the agreement has been struck the market will rebound like crazy.  So I am going to watch the market very closely in the month of July. Pick up good stocks along the way and hope to ride the euphoria come Aug 2nd.