What can happen to the market


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What can happen to the market

  1. 1. What Can Happen To The Market? - Some Thoughts - MONEYWERKZ “ Making Money Work”
  2. 2. When Bull Market Leaders Top Out, The General Market Tends To Follow Suit – Let’s Look At History MONEYWERKZ “ Making Money Work” Tech Bubble Burst Bear Stearns/Lehman Financial Crisis Oil collapsed from peak $147 Where/When Is The Next Peak?
  3. 3. S&P Sector Performance Gains in Energy Sector Seems Near Top ??? 52-weeks YTD 3 months 1 month MONEYWERKZ “ Making Money Work”
  4. 4. S&P500 correlates with Silver, Gold & Crude Oil. So, What If These Commodities Form Bubbles And Burst? MONEYWERKZ “ Making Money Work” S&P 500 Gold Crude Oil Silver
  5. 5. Weak US Dollar Has Driven Up Commodities Prices. Investors Tend To Hold Gold & Silver For Hedging MONEYWERKZ “ Making Money Work” US Dollar
  6. 6. Gold, Silver & Oil Are Driven By Speculation. Underlying Fabrication Demand Alone Cannot Support Current Price Levels MONEYWERKZ “ Making Money Work” Lumber Copper
  7. 7. In Relative Terms, Silver Has Been The “Mother” Of All Speculation MONEYWERKZ “ Making Money Work” Silver S&P 500 Commodities Gold Oil
  8. 8. Energy sector has been leading the bull market. It has recently broken the uptrend line. Will it break support and lead the general market to a decline? Momentum Oscillator is showing a divergence. MONEYWERKZ “ Making Money Work”
  9. 9. USD has recovered from bottom recently and has briefly broken the downtrend line. Will it break resistance and recover further? MONEYWERKZ “ Making Money Work”
  10. 10. Some Questions to Ask <ul><li>The weak US Dollar has played a part in pushing up commodities and stock market. What if the US Dollar starts to recover and gain strength? </li></ul><ul><li>Weak USD was partly due to expansion of money supply through easy monetary policies (QE1 and QE2). What will happen when QE2 ends in June. </li></ul><ul><li>Weak USD was also due to FED’s policy of keeping interest rates low for extended period. What will happen when FED starts to raise interest rates. </li></ul><ul><li>Bernanke has maintained that there is no need to raise interest rates so soon to control inflation as inflation in food and energy prices are “transitory”. Is he implying that we will see lower oil prices soon? Why is he so sure? </li></ul><ul><li>China, India and many other countries have already increased interest rates a number of times. ECB has been talking about increasing interest rates soon. How long more can FED hold the interest rates unchanged. Bernanke at its recent maiden conference explained that “extended period” means “a couple of meetings”. Are we likely to see the first rate hike before the end of the year or sooner? </li></ul><ul><li>Will a higher USD start to cause commodities (including crude oil) and stock market to fall? </li></ul><ul><li>Oil prices will retreat and stabilise once the geopolitical risks in Middle East & Africa are reduced. Will lower oil prices cause the energy sector to lead in market decline? </li></ul><ul><li>What do all these developments mean for the global stock market? </li></ul>MONEYWERKZ “ Making Money Work”
  11. 11. Knowing Where Are We Now? MONEYWERKZ “ Making Money Work”
  12. 12. Wise Words Of Advice “ The secret to your financial success is inside yourself . If you become a critical thinker who takes no Wall Street “fact” on faith, and you invest with patient confidence , you can take steady advantage of even the worst bear markets. By developing your discipline and your courage , you can refuse to let other people’s mood swings govern your financial destiny. In the end, how your investments behave is much less important that how you behave ” MONEYWERKZ “ Making Money Work” <ul><li>Benjamin Graham - </li></ul>
  13. 13. What Can Happen To The Market? - Some Thoughts - MONEYWERKZ “ Making Money Work”