trust no one

I have trading accounts with four different brokerages, so I generally get lots of advice on the market situation. (Of course they flood us with information, because information makes us feel empowered to make decisions, and decisions mean transactions which means commission for them.) We all know that nobody can ever really predict the stock market, but sometimes the difference in opinion are mind boggling.

Just look at these advice from the last two months, when our stock market was quite tumultous. This first one was from last week, after the market had been rallying for a week or two.

DBS Broker 10 Jul (The Bear)
Current market still looks like a sell first ..
If you "intend " to sell during the last sharp fall, now it's the best time to SELL
(as prices are higher by 50% from the low )

POEMS Broker 9 Jul (The Bull)
With Wall Street having taken a beating on Friday due to the unimpressive unemployment figures (starting another trend of inflation worries which leads to interest rate hike worries), I would expect the STI to take a breather next week and move toward the lower uptrend support channel. As with last week, my opinion and strategy is still to accumulate on dips but to no more than 50% of your portfolio. A breakout from the 2450pts level will justify an increase in equity weightage.

Perhaps even more worrying was the advice they were giving a month ago as the market was falling ... but before analysts had quite decided whether or not we were in a bear market.

DBS Broker 26 May (The Bull)
STI yesterday hit a new low intra day but closed above 2400
Although STI went lower intra day, prices of most stocks didn't fall lower

This scenerio is a "reversal" situation.
What it means, market will do a "reversal" soon and go back up

If you are thinking of buying, this is a great buying opportunity
No change in my forecast and targets for STI ( will only change if the
fundamentals and technical meet )
No change in the stock pick

This is not the begining of a bear run yet
Uptrend of STI is still intact
2700 target still maintain over the next few months

POEMS Broker 23 May (The Bear)
I usually do not provide a mid week update on my weekly mailing list. But circumstances dictate otherwise. As can be seen, the STI found support on the 2400pt level. Given the drastic drop over the past week, the volatility of the STI has increased significantly.

This environment is ideal for traders looking for high risk high return. However, I would like to caution against traders holding your position beyond 2 days. Buy on dips and wait for the technical rebound to sell. Do not get greedy. Once you have bought, place your sell order to remove the “greed” element when the technical rebound occurs.

For mid-term / long term investors, the situation is still not clear. Volatility is still too high to say where the market is truly headed. The market moved down or is moving down on high volume and this is not a good sign. Wait till volume has dried up before picking up stocks. If you wish to take less risk, wait for the volume dry up and then the breakout on high volume to re-enter the market.

If you take a look at the corresponding graph for the STI, you get a pretty good idea of who has been giving the better advice. And as for the other guy, he's been wrong so many times (on this and other recommendations) I'm surprised he is still in business. Thankfully I've never given him any.


Of course the most annoying thing was that the analysts finally reached agreement in mid-June that we were truly seeing the start of a bear run. So I started cutting losses. And of course the market promptly began recovery. Well, that's very much like what my finance professor used to say ... the sentiment is usually the flip side of reality.