All the Way UP

On January 7, I posted in my Facebook group telling to buy. On January 9, my Sentiment Analysis shows a clear uptrend. Today, on January 15, gainers still outnumbered losers. This good sentiment streak had last for 7 days, the longest since August 2013. If you bought something for mid-term, HOLD them. If you are trading, you could switch your portfolio to shares that require longer holding period to realize bigger gains. If you are not in the market yet, don’t be afraid because this Bull is going to last for some time. Do more homework today, look for continuation pattern like flags (my favourite, which I see a lot today), retracement with low vol etc.

My view for the market? Super Bull. From my conversation with the people around me, I realize that they are several views on 2015 outlook: Rise a little, drop a little, or drop a lot. No one actually dare to say RISE A LOT. Because of that I would bet that the market will rise a lot this year. Of course, I don’t base my analysis on just that. Here are some of the reason why I think the market is going all the way UP.

(1) It’s the surprises that move the market, not what people think it will. Bull climbs walls of worries, and there are still many worries among the investors/ traders at the moment.

(2) The market lowest point was hit end of last year when crude oil was trading above USD54. As crude oil price drifted lower to the USD40+ range, our market never creates lower low. Most oil and gas stocks did not even retest their lowest low although we could see some selling in them.

(3) After being out of the market for quite some time, the smart players are rushing into the market almost all at once and this will push the price up. Then comes the momentum players who want to be part of the action after seeing share prices surge. Then comes the initial doubters who help to create the last leg. Everything will happen faster than usual because of the rushing in of the pros. Theory of reflexivity at work.

(4) Are there any more bad news for Malaysia? No.Palm oil had fell so low that it is unlikely that it will fall further given the recent flood that had reduced our supply. Crude oil will rebound (and is rebounding at the time of this writing). When crude oil rebound, people gain confidence, MYR expect to strengthen, Foreigners will come back and push the share price up further.

(5) Based on history, the longer a bear market is, the longer the subsequent bull market is (while the magnitude of the drop experienced in our market wasn’t that huge, the long sluggish sentiment should qualify it as one of our bear market, at least according to my experience). It works like a mirror. In fact, bulls normally last longer than the bear, as history shows. Our market touched the highest point in July 2014 and Sentiment recover in mid January. That’s about 6 months. So I would expect 6 months of Bull, at least.

EMOTION: You shouldn’t let your pass emotions dictate what you should do today. Do not let your pass experience in the last 6 months make you timid. Think about how bullish and aggressive you are at the market peak when you shouldn’t be. That’s the kind of feeling you must have for now because you are at the very bottom of the market now.

BEST STRATEGY: Buy and hold. Trade the big trend. Because you are at the very bottom now.

Don’t get me wrong. I didn’t say that the market will go all the way up in one straight line. The road ahead will be bumpy but rest assure that its going north. Based on every sign that we see to-date, every retracement should be taken as an opportunity to buy, The improved sentiment should bring share price back to their “normal” levels, however you estimate them (based on fundamental “intrinsic value” or technical “previous major highs” etc).

My view may change based on changed in circumstances along the way, but at the moment, I’m bullish.