Skyjuice

The Protest in TsingHua University Beijing

noreply@blogger.com (Sky Juice) — Mon, 28 Nov 2022 01:10:00 +0000

28 November 2022

"Hundreds of students protested against Covid-19 lockdowns at Beijing's Tsinghua University". This was the headline in the Straits Times and many other global newspapers. It happened just last week. Just like any other protest in China except this time, it is much different and more sophisticated.

Doubleclick picture to go to Webpage

What's so Different?

The students were seen carrying white papers with some "inscriptions" that nobody can understand. On the papers, this formula was written:

What Does That Mean?

Some Twitters explained that the students were asking for
freedom. This is because the formula is a Friedmann formula and Friedmann sound very much like "freedom".

Doubleclick picture to go to Webpage

Are There Other Meanings?

To find out, we would have to watch this youtube video that explains all about the Friedmann formula, how the formula was formed and what the formula was for, etc.

Unfortunately, the video was not for common reading and understanding until one comes to the very end of the video when this picture was flashed on the screen:

The picture shows a curve that was derived from the Friedmann formula. The curve described how our Universe was developing over the last 13.8 billion years. In the very early years before 47.000 years, it was dominated by radiation, then it was by matter from 47,000 years to 9.8 billion years, and today, after 13.8 billion years, the Universe is dominated by Dark-Energy.

In Conclusion

It is therefore very clear that the real meaning of Tsinghua students is that they are now living in a Dark-Energy Dominated World and they are asking for "freedom"

China Index Movement

noreply@blogger.com (Sky Juice) — Mon, 10 Oct 2022 01:08:00 +0000

Latest Brief: 07 December 2022: we see the Hong Kong market is trapped within a downward channel, and the Shanghai market is in a down falling wedge. They will need to break up the channel/wedge for more gains or find another pivoting point within the channel/wedge.

Jump to

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

07 Dec 2022: HSI Channel & Shanghai Wedge

The HSI and Shanghai stocks have been rallying since early November and they have reached a pivoting point where a decision will have to be made going forward as shown in the following chart.

Hang Seng rose about 4.900 points from 14,600 to about 19,500 or 32% and Shanghai rose about 300 points from 2,900 to about 3,200 or about 10%.

The Hong Kong and the Chinese markets are presently driven by news of China's re-opening and relaxing of Covid rules and also Beijing's effort to stimulate economic and housing growth. But we will have to wait and see how these efforts will stimulate the economy.

As is, the projection for Hong Kong's economy is not looking good. PIMCO has revised Hong Kong's real GDP growth forecast for 2022 down to -3.2%. As for China, PIMCO's outlook was slightly better. They have projected a baseline annual GDP growth of about 3% for 2022 and 5% for 2023.

Chart-wise, we see the Hong Kong market is trapped within a downward channel, and the Shanghai market is trapped in a falling wedge. Going ahead, they will need to break up the channel/wedge for more gains or find another pivoting point within the channel/wedge.

28 Oct 2022: Head & Shoulder Pattern

Shanghai stocks lost more than 2% and Hong Kong stocks shed more than 3.6% today. The China markets appear not going too well with the setup of the new administration in China.

Technically, Shanghai has formed the Head and Shoulder pattern as shown and fixed the deadly Diamond shape pattern as described before. The target price is estimated to be between 2,200 to 2,400. As for Hang Seng, the target price still remain at 11,000-12,000. For some reasons, both bourses are still lacking the large trading volumes that one can confirm the trading patterns.

24 Oct 2022: Growth up Market down

China reported better-than-expected economic growth today. Its GDP growth reported in October is 3.9% while the expected was 3.3%.

Rightly speaking, the Chinese markets should have jumped today but it fell instead. Why?

The reason is that the other vital statistic has been falling more than expected. The market players appear to be taking China's economic report as is where is.

10 Oct 2022: Breaking the Diamond

Today is the National Day in China. It is the 1st trading day after a long 7-day public holiday. Usually, Chinese stocks will always do well during this time as they celebrate the new Chinese National Day. Moreover, this year is special because they are also having the 20th National Congress ( 二十大) which is held every 5 years. This year, Congress will not only re-elect the President but also chart the forward direction for China.

Surprisingly, SSE, HSI, and other Chinese stock exchanges are not doing well this time. Most exchanges have dropped over or about 2%. This phenomenon does not bode well with the celebration moot happening now in China.

From the Technical Analysis of the SSE chart, we might be able to see why.

The chart is showing us that SSE has just about to break the Diamond shape pattern except the breakdown did not have the volume confirmation at the moment. There were also 2 preceding small diamonds, D2 & D3, pushing down for SSE to breakout from D1. The breakout appears to be imminent.

Going forward, we are expecting the SSE trading volume to build up if the traders are expecting the results of the 20th National Congress will not go well this year. This is because China is presently having a 3D problem: Debts, Diseases, and Droughts.

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16 Sept 2022: HSI Breaking Down

The HSI is showing signs of breaking down as illustrated in this weekly chart

First, HSI broke the Head & Shoulder line (as shown in the red thin line) around Feb 2022. This brought the index today to break the descending triangle (as shown in the red thicker lines). If the supports @ 18,500 & 17.500 could not hold the descent, it might head lower towards the target which is around 11,000-12,000.

16 Sept 2022: SSEC Cup and Handle

A cup and handle pattern was also formed in SSEC as shown.

It is presently waiting for the handle forming to be completed. For confirmation, look out for SSEC to fall sharply with heavy trading volume when this handle is being formed just like the rest of the cup and handle patterns.

1 Sept 2022: HSI Cup and Handle

The cup and handle patterns are now found everywhere. They can be found in the US, Europe as well as in China Markets . HSI has the real ones as shown in the following chart.

From the textbook descriptions, it would appear that HSI has some more to drop before hitting the minimum target.

29 August 2022: About HSI

The HSI is the worst index among the 4 indexes tracked in this chart

Doubleclick picture to go to original webpage

HSI began to lose its shine since HK Riots started around the end of 2018. It has some relief when the HK new Security Laws were introduced in 2020 but this temporary relief was quickly dampened when the Hong Kong Exodus took place around early 2021. Since then, HSI has not seen a good week as shown in this HSI weekly chart.

Chart-wise, we see a descending triangle in the weekly chart and HSI is approaching the apex and is about to make a breakout. According to most Technical Analysts, it will be time to buy Hong Kong stock if HSI breaks out and rise from this descending triangle; otherwise, it should be time to see HSI falls continuously until it hits the next support.

Since the US market just had a bad time last Friday with major indexes falling about 3%, it is more likely to see HSI breaking down and falling continuously unless there is a piece of good market news, unexpectedly boosting the market sentiment.

25 August 2022 (Update)

The tradings in China's market were muted in the morning session but rose to "squeeze" a gain of about 1% in the Shanghai Composite (SSEC) in the afternoon session. This happened after Hong Kong started trading in the afternoon after having closed in the morning due to a typhoon.

The Hong Kong stock jumped with a gain of over 3%

Morgan Stanley attributed the cause to a "short covering" by Hong Kong Traders as the amount of bearish bets against Hong Kong stocks has risen to dangerous levels. The Hong Kong Traders could have rushed to close out their "short" positions.

25 August 2022

China's market fell about 2 to 4% across the board yesterday.

The market is believed to have been spoked by Huawei Chairman, Mr Ren, talking about a bleak future for Huawei.

Doubleclick the picture to read the actual news

Today,  SINA (新浪财经）reported that the Chinese policymakers have in its pipeline a ￥300 billion (USD60 billion) rescue package for setting up 19 policies to stabilize the economy.  This report said the Government had been trying to raise money by issuing Government bonds.   The proceeds will be used mainly to finance the new infrastructure projects and not more than 50% of it will be used for capitalizing debt projects. 

Doubleclick the picture to read the actual news  

The Reaction in the US Market last night

The Xinhua news reported that  U.S.-listed Chinese companies traded mostly higher on Wednesday with nine of the top 10 stocks in the S&P U.S. Listed China 50 index ending the day on an upbeat note.

However,  a quick check on investing.com @ 21:00 EST found that the Futures of the Chinese and Hong Kong indexes were trading flat as seen below:-

Real-Time Stock Indices Futures (Investing.com)

Closing views

The USD 60 billion rescue package is NOT a very big sum as compared to the US's many economic rescue packages of the past. Moreover, the economic problem in China is quite a gigantic one. It does not only require a large sum of money but also the support of the people and the industries. Understandably, the zero Covid policy and the anti-West policies have driven away much-needed foreign investments and the talents that are required to reboot the economy.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

US Index Movements

noreply@blogger.com (Sky Juice) — Sat, 08 Oct 2022 07:07:00 +0000

Latest Brief: 18 January 2023: We still maintain the view that it is NOT the right time to enter the market as the market has yet to illustrate this rally is sustainable. So far, the market has not been fully supported by the trading volumes. However, this situation might change if DOW continues to make higher highs.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

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18 Jan 2023: Market Selling ?

The Analysts like Goldman Sachs are reporting that retail investors have sold all of the stock they bought during the COVID-19 trading boom, They are showing us this chart.

The chart is telling us that S&P 500 and Nasdaq retail investors have reduced their stock holdings from January 2022. This was when Fed started talking about raising their rate hikes.

This chart is quite similar to the chart we have earlier posted on 13 January 2023. Then, we were using DOW's trading volumes to plot the chart.

We still maintain the view that it is NOT the right time to enter the market as the market has yet to illustrate this rally is sustainable. So far, the market has not shown that it has been fully supported by the trading volumes. However, this situation might change if DOW continues to make higher highs.

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13 Jan 2023: Time to Enter Market?

As expected, the powerful back-kicks sent DOW higher by about 800 points or 2.3%. The trend chart is telling us that there are still rooms for DOW to go higher and might challenge the resistance R71 as shown in the following chart.

The chart is also telling us that there is a good potential for DOW to scale higher highs after that. But is it time now for longer-term investors to enter the market?

We all know that the stock market can be manipulated. Few big players can send the stock prices going up to trap retail investors. We also know that trading volume is the one to watch out for. If the volume is high, we can see the big players are putting "money where their mouths are" and vice versa.

We are seeing that the trading volumes for the last two trading days for DOW were below average. But the volume figures in there are not going to tell us much because the volumes are always going up and down. So, when will be the best time to enter the market?

How to Tell?

If we can, we can sum up all the up-volume, then minus the result with the sum of all the down-volume. If we were to do this on a daily or weekly basis, we should be able to see that trend and assess whether the players are putting "their money in their mouths". Fortunately, the Free Stockchart has the exact chart as shown here. It is a weekly chart.

We see that the trend of the 20MA is still not recovering and the 50 MA has already cut below the 200MA. The position is still bearish as far as the DOW's volume is concerned

When will be the Best Time?

The best time to enter the market should be when the 20MA started to cross the 50MA.

Has this Strategy ever failed?

There is no foolproof strategy per se. The strategy did fail in this chart of 2000. But it succeeded in 2003 to make higher highs until the year 2007.

Take Aways

It is always very tempting for investors to enter the market at the moment but we do not think it is the right time yet as the market has yet to illustrate the rally is sustainable. It is not fully supported by the trading volume.

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9 Jan 2023: The Power of Back-kicks

Contrary to the belief about the strong job data in December would cause a hawkish Fed last Thursday, traders and investors on Friday have the opposite views. They perceived that the Fed may ease their rate-hiking campaign. So they pushed U.S. stocks to rise more than 2%, not only to negate the 1% fall on Thursday trading but also to close the week higher on Friday. But is this kind of 2% rally all of a sudden sustainable?

Any way to Tell?

We can see from the chart that DOW has just escaped from a minor triangle by breaking up the trendline as shown. It is now looking bullish just like the other triangles except this triangle is symmetrical.

What is the Chart Telling us?

The chart is simply telling us that DOW is prepared to make higher highs if it is permitted to do so.

The Power of "Back-kicks"?

As usual and in such trendline breakouts, the traders will always want to do a "back-kick" as shown in arrowed red in the following chart as an example. The "back-kick" is usually the way traders re-test the trendline support to confirm that the uptrend will stay.

Has "Back-Kicks" ever failed?

There were 2 attempts of back-kick that failed as shown in this example and it occurred recently. The failures were caused by Fed trying to raise Fed fund rates

The first attempt marked as blue arrow 1 failed to take off in April 2022. This is when Powell announced in an IMF debate that Fed would raise the Fed Fund rate by 50 BSP in order to curb the rising inflation. The second attempt also failed in July/August 2022 when Powell announced in JackHole that Fed would raise the Fed Fund rate by 75 BSP.

Going Ahead

We should expect DOW to do the same back-kick attempt to retest the trendline. We would like to put a trading stop to cut losses when DOW breaks below the trendline.

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7 Jan 2023: Corporate Weaknesses?

As valued investors especially those long-term investors, we will always want to know if the companies we have invested in are making money and if they will want to pay us good dividends. Many a time, we invest not just for gains in stock prices but also for how much dividends we will get by the end of the year.

Similarly, when investing any stock in a stock exchange, we also like to know if companies in that exchange can sustain the punishments during bearish and difficult periods such as those we are in today. If they are not paying us good dividends or yield, we would want to move our money to other assets such as Bonds and Dollars. Or maybe we should just be nibbling, sitting on the fence, and waiting for the next opportunity to invest in the stock market.

But How Do we know?

One thing we can do is study the Corporate results of large-cap companies in the stock and sum up the companies' dividend yields to compare the returns.

A better way is to use the following chart. This chart is showing us the plots between the S&P 500 and the average yield of the stocks in the S&P 500 minus the 3-month US bond yield.

According to the definition, the indicator,!YLDSPX is calculated by totaling the trailing twelve months (TTM) of dividend values for $SPX, divided that by the closing value of $SPX, and multiplying the result by 100.

The chart is showing us that during the bearish period of the past, the yield from S&P 500 is generally better than the US 3-month bond yield (as shown by the green arrow). This could be because the companies were paying higher dividends in those difficult times in order to retain and compensate their investors.

Today, we are seeing a totally different picture. We see the companies in the S&P 500 not paying dividends like before and the stock market returns were nose-diving.

Why?

There are probably 3 reasons;

a) The companies are in financial trouble; most of them are losing money; if not,

b) They are having many unexpected expenses; or

c) They are retaining the profit to fund future growth;

The details of the reasons are outlined in this Investopedia.

We are keener to think that the companies in the S&P 500 are now having either financial difficulties or are reserving the dividends for unexpected expenses.

In view of the above, we are of the view that it is better for us to be more cautious than before if we decided to park all our hard earn money in stock markets.

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6 Jan 2023: Danger Ahead?

On the Thursday trades, the Dow Jones Industrial Average fell 339.69 points, or 1%, to 32930.08; S&P 500 fell 44.87 points or 1.2% to 3808.10, and Nasdaq Composite fell 153.52 points, or 1.5%, to 10305.24. This was caused by a stronger-than-expected labor-market report. Then the market was fearful about Fed would be more hawkish when making monetary decisions.

In the following DOW chart, we saw DOW broke below the 50 MA line for the second time since October 2022. The last breakdown was on 28 December 2022; then, DOW recovered the next trading day.

But this time, it is different, we saw also the 20MA was about to break below the 50 MA. It is telling us about there is a danger ahead.

The last time when 20 MA crossed below 50 MA was on 14 Sep 2022, then DOW lost about 2,400 points or 8% over a period of about 2 weeks as shown in the following chart.

Going ahead, we will expect DOW to test the 200MA support if it breaks the trendline TL3 which DOW found to be the support on Thursday

As Fed's rate hike decisions are more driven by inflation data, we see a good chance for the market players to concentrate their efforts more on the market recovery than the Fed rate hike decision. This is because we see oil and gas prices falling in recent weeks. This will help to drive down the inflation rate.

We are beginning to see the CPI and PPI starting to fall as shown in the following chart

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30 Dec 2022: A Different Piece of Cake?

Many investors are buying equity stocks because of the better yield. When the yield returns are not as good, they switch over to other assets such as bonds or currencies.

Here is a chart showing the yield returns of SPX or SD&P 500 in the US market for the last 30 years, from 1990 to 2022. The chart is drawn by dividing the annual yield for SPX by the closing SPX prices. It is expressed in percentage. The chart is showing us the yield return of SPX is presently at 1.7% which is much lower than many of the US bond yields.

Where are we?

The chart is showing us that our present yield pattern is quite similar to those in the dot.com period of the year 2000/01. We are about to reach the 2003 level where the market took off to make another bull run. We are almost near the bottom or have already bottomed.

Why not like the 2008 or 2020 period?

Both the 2008 and 2020 periods have a spike as shown in the chart. The spikes are caused by market failures where the stock price "went over the cliff" all of a sudden. In 2008, we have Lehman Brothers, and in 2020, we have the Covid Pandemic. Unless we are expecting a similar market failure like in 2008 or 2020, the present market would be more like the one in 2001/01 as far as we can read from the yield return curves.

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25 Dec 2022: Profit-Driven Stock Market?

We have always been told that the stock market is always driven by Corporate profits. The market price will go up because the Corporate earnings have gone up and vice versa. Is that really true?

Let's look at this Fed's Corporate Profit vs Stock Market chart for the Great Recession in 2008/09.

We can see that the Corporate profit curve was

a) Leading when the stock market is rising;

b) Lagging when the stock market is falling; moreover, it is

c) Leading & picking up before the market hit the bottom.

We could see this pattern repeat in most of the recession period except for some; for example, the period in the 2020 recession.

In the 2020 recession, the Corporate profit curve was not only not driving the stock market but also, it was lagging slightly behind the stock market recovery. This could be due to monetary tightening in 2017/18 and the Covid-19 pandemic.

Now let's look at the same chart today.

We could see that the curves were tracking quite well until mid-2021. But when the stock market started the fall in early 2022 and when Fed announce its plan to tighten the monetary policies, the Corporate profit curve took a turn to rise above the stock market price. Why?

It is rather unfortunate that the Fed's Corporate profit report is not in real-time for us to predict the market movement, but we could see clearly from this next chart that the Corporate profit's recent rise was mainly driven by rising inflation.

This was what most analysts were also saying.

If that is the case, we tend to go along with the argument that any stock market rise will be met with the challenge of falling inflation and may not be sustainable unless the Fed can do something to sustain the Corporate profit from falling.

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24 Dec 2022: Expect the Unexpected

We have a "Golden Cross" on Wednesday, 14 December. This is a Christmas gift for the traders. But the danger is not over and the stock market is still not out of the wood yet. What would happen after the festive season is over?

Many traders and analysts were expecting the present market to mimic the 2008 Lehman Brothers falls. When that did not happen, they looked into the 2000 dot.com bubble's falls. Some even went as far as the 1946 historical chart to find some similarities.

They all have one thing in common, and that is trying to expect the unexpected.

We could do the same expectation using a proven and very common tool, i.e. the "simple moving average as shown in the following chart.

We could see from the above chart that DOW tends to go for lower lows whenever the 20MA cuts below 50MA when the market is bearish and vice versa.

The situation is no different when we examine the 2008 chart as shown below

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23 Dec 2022: A Choppy & Volatile Session

The US stock market ended the trading day sharply down with a choppy and volatile trading session. DOW was down 350 points or 1.1%; SPX, 56 points or 1.5% and Nasdaq, 235 points or 2.2%.
The market was way down around 1:00 pm with DOW breaking the 50MA and losing by about 2.5%. DOW then recovered gradually to 1.1% after touching the set target of 32,500 as shown in this chart.

The market had once given people the impression that it would want to go lower to break the 50/200MA and cover up Gap2 on its way down. This was when many market commentators & Analysts were of the view that the stronger GDP economic figures had the fear about Fed would be more hawkish in monetary tightening.

Going ahead, we are hopeful to see DOW continuing to break R6 and test TL2 as originally planned.

If there is any better guide, the following 5-minute chart will help to show that the traders might aim to cover up 5Gap2 as well as 5Gap3 in the next session. The sequence of the gap covering might give us some hints about future directions.

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22 Dec 2022: How Far Will DOW Rise?

Dow closes up 500 points, lifted by upbeat earnings, and strong consumer confidence data. But how far will DOW rise?

There is no way to tell from the ordinary chart. We only know DOW has broken the resistance R6 and is ready to scale higher.

If we were to use this other chart, we could see something different.

The above chart has the up-volume indicator removed, leaving only the down-volume visible. One could readily see that there was a small capitulation (the blue line) on Friday, 16 December 2022. This capitulation is much unlike the rest of the capitulations except for those two seen earlier and before DOW had the fall in January 2022.

The above chart is now telling us that DOW has the potential and the traders might want to test TL2. If successful, it should be able to scale higher high.

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21 Dec 2022: US Market Update

On Tuesday, the Dow Jones Industrial Average DJIA, +0.28% rose about 92 points or 0.3%, ending at around 32,850. The S&P 500 index SPX, +0.10% gained 0.1% and the Nasdaq Composite Index COMP, closed virtually flat. Analysts attributed this market rise across the board was caused by the Bank of Japan loosening a cap on 10-year government bond yields.

In the DOW Chart, we see DOW found support at the 50MA after hitting the target of 32,500 set earlier. It has yet to test the 200MA support which is now resting on the 0.382 Fibonacci Retracement support as shown in the following chart.

Going forward, we are expecting DOW to challenge the various support/Resistance R6, R61 & R7. It will go higher if it can subsequently break above TL2.

At present with just one rising star-shaped candlestick, it would be premature to suggest that the US market has recovered from the recent fall; but, we have checked and verified to show that the present market fall is not the same as the market fall in 2000 or 2008.

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17 Dec 2022: Market to Mimic 2000/ 08 fall? (updated 18 Dec)

Some 3 months back, we noticed that some analysts were expecting the US market today to mimic the 2008 market fall. They superimposed the charts to show where we were and what to expect. Some Analysts still continued to monitor and update the chart as shown below. So far, the Analysts are divided with some saying a serious fall to come while others expected the market to bottom soon.

We are of the view that the best way to find out if today's market is mimicking the past years is by comparing the moving averages. We got the following pictures when we used the 50 MA and 200 MA to compare them.

We found that the present market is not in the same situation and predicament as in 2008. The present market looks much healthier with DOW's 50 MA already crossed the 200 MA (the Golden Cross). As for S&P 500, its 50 MA is about to cross the 200 MA.

We then chart the ratio between the number of DOW's stock going above 50 and 200 EMA (EMA ratio), and we got the following chart:

The chart is showing us that the US market tends to bottom out whenever the EMA ratio is about to reach zero except for the periods during the "dot.com bubble" in 2000-2003 and the "Great Recession" in 2007-2009. The 2003/2009 ratio went way up instead of dropping to zero. The reason could be because the market then was "so very broken". They wiped out almost all the stocks, causing many stocks to fall below their 200 EMA level.

As such, we maintain our view that unless there is a similar event as big as the collapse of Lehman Brothers or dot.com bubble. we don't expect the US market fall will be the same as dot.com bubble or the Great Recession.

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16 Dec 2022: What Went Wrong?

The US Futures was down after Mr. Powell delivered his hawkish speech on Wednesday. But the Futures market took a sudden turn just before 8:30 am. This was when the following set of economic figures was announced.

DOW ended the Thursday session with a loss of more than 700 points which was the highest in the last 3 months. Analysts were speculating that the market players suddenly woke up and were having the thoughts that "Bad News is Bad After All". But is this really the case?

Well, nobody will have the answer. Fed was adamant and was insisting all the time that the US economy was not in bad shape and recession was not forthcoming. They said it was evidenced by the tight labor market situation and the stubborn rising inflation. They are keeping the lids on the rate hike cycle and speculated that the Fed Fund rate would continue to rise to 5.1% by next year.

Chart-wise, we saw Gap3 was finally filled. We also saw the 50MA start to cross up 200MA for the first time since 8 months ago. It would appear that this downfall in DOW might be temporary, not until the 50MA started to reverse the trend. However, we expect DOW to continue its fall to test the 50/200 MA before deciding "what's next".

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15 Dec 2022: What's Next?

Powell has spoken. He said FOMC will continue to hike the rate until the inflation rate falls to 2.0%. He expected the Fed Fund rate to reach 5.1% by next year. The US market players were disappointed. The stock once fell by more than 1% across the board and only recovered some ground by the end of the trading day.

It would appear that some US market players are still hopeful Fed would be less hawkish especially when they saw the inflation rate is coming down. This can be seen in this chart which shows not only the US's 3 months bond yield has broken down below the rising trendline but also the bond market was not able to recover from the fall in the last 2 trading sessions.

Going ahead, we would still expect the US market to continue its falls except at a much slower pace or even going sideways, at least for the time being until the festival session is over. We are still hopeful that Gap3 would be covered before DOW could make any further move ahead.

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13 Dec 2022: Who is Lying?

The US market surprised many traders by jumping up more than 1% on Monday trading whereas the S&P 500 VIX went up by more than 9% as shown in the following table.

The market could be excited by an inflation expectation report released by the New York Federal Reserve Bank. The report said, "the median one-, three-, and five-year-ahead inflation expectations decreased to 5.2 percent, 3.0 percent, and 2.3 percent, respectively". In addition, the report also said the US home price growth is expected to drop and the labor market is expected to strengthen while the household income is expected to grow higher.

What surprised many is why VIX jumped over 9% as a result. Many reckoned that VIX was lying but why? Some are expecting a big market move to come while others are saying nothing would happen and advising people to ignore it.

We are aware that VIX is a contrarian indicator and normally, it would run against the market in the opposite direction. In this instance, we are supporting the view that the market players presently are not totally convinced about what was reported in the Fed's inflation expectation report and they are hedging their equity buying with lots of put options that pushed up the S&P 500 VIX.

Chart-wise, we see DOW resting against R7 which means DOW is still not out of the wood yet. The CPI report today and the Fed's rate hike announcement on Wednesday would decide DOW's direction. We are still tempted to expect DOW would cover Gap3 and test the 200MA support although we might be wrong this time as the calls for a less hawkish Fed are getting much stronger now.

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10 Dec 2022: Awaiting FOMC Meeting

The US market went flat for the last 2 days after making hefty losses on Monday and Tuesday. If not because the market was spooked by the news of a higher Producer Price Index (PPI), the US market could have stayed flat for the week until FOMC makes its decision on 14 December. The PPI figure on Friday went up for the month as shown in the following chart.

If we were to plot PPI against CPI, the US inflation rate, we could see the PPI dropped drastically by 60% over the year as shown in the following chart.

Judging from the way that PPI is tracking very well with CPI over the last 70 years, we expect the CPI figures to be announced next week
would be lower just as was expected.

As for the market direction, we are tempted to suggest that DOW might fall to cover up Gap3 while waiting for the FOMC announcement on Wednesday, 14 December.

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07 Dec 2022: Monitor The Short Coverings

The US market continued to fall on Tuesday after Monday's sharp losses of more than 1%. The Nasdaq led the indexes downward, falling 2%. Oil prices kept falling, too, and are now in negative territory for 2022.

We are now looking at the Refinitiv US Most Shorted Index (TRXUSMSHRT) as shown in the following chart. We noted that the US market's short-sellers are not keen to cover up their shorts in the recent rally. Many are of the view that the short-sellers are thinking this rally will not last very long.

But that does not mean that the market will definitely fall very badly going forward. In fact, the following chart will show that the TRXUSMSHRT index tracks quite well with DOW over the past 5 years. The sharper falls in the TRXUSMSHRT index this year could be affected by the exceptionally heavier short-covering trades seen in the year 2021.

This Refinitiv US Most Shorted Index (TRXUSMSHRT) could be another good indicator for us to monitor when the US market is going to recover.

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06 Dec 2022: Prepare for the Correction

The US stock market fell after strong data on factory & services sectors were reported. At the same time, we saw oil prices sink but bond yields climbed. Analysts were saying they were expecting a recession to come sooner. They were signaling that the market has reached a pivoting point. It is ready to make a descent soon.

If we have to pick a chart to describe the present situation, the best chart to pick is the DOW's McClellan Oscillator Index weekly chart as shown below:-

The chart is telling us that there is a good chance for DOW to make a correction going forward. But the chart could not tell us if the coming correction is a deep one or just a minor one.

At present, we expect to see DOW making a minor correction just like those occasions in 2020. Then MCOSIRDOW recovered very quickly in see-saw intervals. These occasions are marked in the blue boxes as shown in the above chart.

On the DOW chart, we found DOW has just broken R7 again. We are expecting DOW to cover up Gap3 and test the 200MA. Our target for the descent is 32,500.

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02 Dec 2022: The Recovery Chances

For some, the chances of buying cheaper stock were spooked by Powell's remark on Wednesday. Powell signaled that Fed would slow down the pace of rate hikes from next month. The US market went up by more than 2%, the highest in the month of November.

Everyone is now looking forward to 14 December when Fed will announce its last rate hike of the year. The market is presently expecting a rate hike of about 0.5 bps. They are also expecting the Fed Fund rate to peak at 4.75% -5% on March 23. This is lower than 5.0%-5.25% last month. Fed is expected to lower the rate only by the 1st November 2023 FOMC meeting.

Searching through our charts, we found that this chart which is telling us that the chance of DOW recovery from the recent fall is around 66%

This chart shows that there 6 times in the past 20 years when the DOW McClellan Summation Index fell below 1,200. Out of 6 times, there were only 2 times (dotted in red) in the year 2000 period when DOW did not fully recover from the fall.

We also checked the same for SPX and NDX, the indexes for SP500 and Nasdaq. The chance of recovery is 60% for SPX and 50% for NDX, For information, the McClellan Summation Index is often used by traders to identify bullish or bearish bias, as well as the strength or momentum of the trend.

On the DOW chart, we found DOW has not yet come out from the wood. It is still trapped below the Trendline TL1. We, therefore, expect DOW to resume its descent to cover up Gap3 and test the 200MA.

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30 Nov 2022: Setting Trailing Stops

The hawkish speeches and comments from various Fed officers and the “white paper” protest in China happening on Monday were part of the cause for the DOW to drop 500 points or 1.5% on the Monday trade.

Traders are now looking forward to Mr. Jerome Powell’s Wednesday speech in Washington. He would speak about the U.S. economic outlook and the labor market. The traders believe Powell’s speech would set the trading tone for the rest of the year. Also, China has been seen to have taken swift actions to cool the “white paper” protest As a result, DOW went flat with a 0.3% gain on the Tuesday trade.

Although DOW's "bleeding" has stopped, we believe it is not out of the wood yet. We see that inflation is still stubbornly high. Many Fed officers were calling for rate hikes to be raised to about 5% except some of them are seeing the rate hike easing off only in late 2023.

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Further, we see rooms in S&P and NASDAQ to absorb further falls as shown in these 2 charts.

On the DOW chart, we saw DOW broke the trendline TL1. Although there was no sign of a bearish candlestick pattern, we see the long red candlestick on Monday. This is telling us that DOW is about to make its descent.

There are Gap2 and Gap3 to be covered. If there is steady news about Fed would stay on course to relax its rate hike, we are likely to expect DOW to cover up Gap3, test the 200 MA and then reverse its direction when the FOMC delivers its verdict on 14 December; otherwise, DOW might continue its way down to test the 50 MA and cover up Gap2.

Presently, we have set our first trailing stop at around 32,500. If we were to use Fibonacci Retracement to set the trailing stop, we would have set it around 0.382 or 32,250 as shown in the DOW chart.

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26 Nov 2022: Right time to enter market now?

DOW has just broken the resistance R7 and is on the way to test R8. Now, the most pressing question is whether it is time to enter the market.

The market has risen all because the recent Fed minute hinted that Fed might slow down the rate hike. As a result, many indicators like VIX and SPXADP that we used to monitor the market are showing early signs of recovery. So is it the right time to enter the market now?

To the day-traders, they would say every day is a good trading day. But for the long-term investors, it might be worth the while to ask further if the market has really recovered; if not, when will that be?

We are aware that there is no one indicator that can give us that answer. However, there is an indicator that is worth-the-while for us to take a look. This indicator is called "Equity Premium indicator".

This is an indicator that compares the differences in the yields between:

a) The Wilshire 5000 which tracks the equity market, and ;

b) ICE BofA BBB US Corporate Index which tracks the performance of US dollar corporate bonds in the US domestic market.

It is plotted as shown in the following chart.

Presently, the chart is telling us the bond yield is much better than the equity yield. This has caused the market players to shift their money from the stock market to buy bonds. That will cause the stock market prices to fall. On the other hand, the stock market price will rise if the equity yield is better than the bond yield.

Rightly speaking, one can always take the opportunity to enter the market once the "equity premium" started to rise. But to be very safe, one should wait and enter the market only when the curve of the "equity premium" crosses the zero axis.

Chart-wise, we see a good chance for DOW to test resistance R8. This is provided DOW will not break below the trendline TL1; otherwise, we would expect DOW to fall and test R7. It might also want to cover Gap3.

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24 Nov 2022: Pay Attention to VIX

VIX is often referred to as a contrarian indicator. It means when VIX is high, there are fears and it is often a good time to enter the market. On the contrary, one should consider leaving the market when VIX hits a new low as illustrated in the following chart.

VIX dropped about 4.5% on Wednesday, 23rd November. This is an extreme movement compared to the movement in the various US exchanges as shown below.

The market is quite complacent at the moment. It is not known if the market would take a turn until VIX starts to reverse and go up again. Nonetheless, it is time to pay attention to the movement of VIX from now on in order to judge the market sentiment.

The DOW chart is showing it has reached a decision point, Breaking above R7 would mean this rally has more legs; on the contrary, breaking TL1 would mean DOW might want to cover up Gap3.

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23 Nov 2022: ThanksGiving Week

It is the "Thanksgiving Week" in the US. For the last 50 years, US stocks tend to do better during Thanksgiving week. According to this Marketwatch report, the S&P 500 has risen 49 out of 72 times during Thanksgiving week. And it rose 60 times in the Wednesday-through-Friday stretch.

On the chart, we see DOW managed to bounce off from the trendline TL1 and hugged just below the resistance line R7.

There may be a chance for DOW to break above R7 and proceed to make a higher high. But the economic situation at the moment might not be in favor of that higher high movement because the US inflation has yet to show an improving sign that might excite the market players.

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20 Nov 2022: Mr. Market is Always Right

They say, “Mr. Market is always right” and Mr. Market is referring to the investors. If there is a way to find out what Mr. Market is thinking; then, it will help us to invest wisely in the market. This article was described early in Sept 2018. Then the market was about to fall.

That article was telling us that there are 2 ETFs, XLY and XLP that we can use to judge the market sentiment. XLY tracks Consumer Discretionary items whereas XLP tracks Consumer Staples. When the market is good, more investors will buy XLY because it tracks companies that are dealings with luxurious and non-essential items such as movies, entertainment, specialty items, etc; otherwise, the investors will buy XLP.

Today, we can still use the very same indicator to find out what Mr. Market is thinking but in a better and better way by using this chart. The chart is drawn by dividing XLY prices by XLP prices.

From the chart, we can readily see that investors will buy more XLP when the market is not looking any healthier and will buy more XLY if it is otherwise. At present, the chart is telling us the present market is not looking any better than before.

This was what the chart looks like during the 2008/2009 Great Recession. It is worth the while to pay attention to the parts circled red as they can tell how Mr. Market will want to move today.

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18 Nov 2022: The Fear of Missing Out (FOMO)

The US market started out losing about 1% or more on Thursday, 17 November 2022 but it ended the session with small losses.

This is despite the constant reminders from the many Fed officers that Fed is not ready to pivot anytime soon. Most Fed officers were of the view that the interest rates might peak at a range of 4.75% to 5.25% but St. Louis Fed President James Bullard reckoned the rates might rise to at least 5% to 5.25%, and possibly as high as 7%.

The market has earlier shown signs of distress with a "hanging man" candlestick pattern but it was nullified by better market sentiment. Since then, the market has been going sideways as shown by this DOW chart.

This could have been prompted by the traders' Fear of Missing Out or commonly known as FOMO. This is especially when the market is lingering with the good news that China is easing its Covid control measures. They are also coming out with financial packages to rescue the ailing property market.

Going ahead, we are of the view that DOW might want to make attempts again to cover up Gap3. It might even cover Gap2 if the market allowed the traders to do so. It would appear that breaking above R7 could be a difficult task especially when the Fed Officers were giving so many warnings about a hawkish Fed.

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16 Nov 2022: A Fake Hanging man?

A hanging man pattern appeared in the DOW chart on Friday, 11 Nov 2022. But for the next 2 trading days, the pattern was not confirmed with a larger down-falling red candlestick as expected and as shown in the attached chart. This was all because of the better PPI results, indicating inflation was being tamed and moving market sentiment up. The sentiment was further boosted by the good "atmosphere" seen at the G20 meeting held in Indonesia. As a result, USD lost its shine, sending US yields down and this pushed the market prices up.

For the last 2 days, the US market prices turned flat with DOW losing only 0.48%, Nasdaq gaining 0.36%, and S&P500 going sideways with a 0% gain.

We are now of the view that the bearish hanging man effect might have been nullified or delayed because of the better market sentiment. This is just like what we have seen in NVIDIA's 2018 chart as shown below. Then, NVIDIA's price was on its way up. It continued to climb, ignoring the effect of the hanging man until 2 weeks later.

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12 Nov 2022: A Hanging man Candlestick

The US markets have had a good week. DOW rose about 4% or 1,300 points from 32,400 the Friday before to about 33,750 last Friday. Much of the gain came from a single day on Thursday, 10 November. On that Thursday, DOW rose about 1,200 sparked by slowing inflation and the falling US dollar.

DOW's performance was not as good as the other indexes last Friday as shown here in this table. It climbed only 0.10%

At the same time, we saw DOW forming a hanging man candlestick pattern which is a bearish reversal pattern as shown in the chart below. In addition, we saw a divergence in the RSI. The chart is now telling us that the rally might have come to an end and a larger correction could be expected. We are awaiting a larger down-falling red candlestick to confirm this is happening.

However, we are hoping the better-performing Nasdaq could prevent this "hanging man" candlestick pattern from happening.

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11 Nov 2022: A Ray of Hope

"Dow pops 1,200 points, S&P 500 jumps 5% in biggest rally in two years." This was the headline in most news media. The US indexes jumped because of the better-than-expected US CPI reports.

It is just like a ray of hope. It does not mean that we are out of the wood yet. Investors are hoping that the US CPI has peaked and the market will rise from today. But it is just too early to tell that a Lehman Brothers kind of event would not happen and if the Ukraine war plus other nasty events that can plague the global economy will end soon.

Chart-wise, we see that DOW just managed to cover Gap1 and is now facing the task of breaking the resistance R7. There is also Gap2, Gap3 & the runaway Rgap4 to be covered up if DOW wanted to scale higher high without further hindrance.

(Note: Gap3 added)

As to whether it is safe to enter the market now, it will be good to refer to this earlier article for reference. Just a note, there are just no 100% guaranteed ways to be safe and accurate in the prediction even if one is very skillful in charting.

An enlarged view of the $SPXADP indicator is enclosed here for information.

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10 Nov 2022: The Next Move Forward

After 3 straight days of rally, the stock market has now taken a deep breath. But the market is really not out of the woods yet. Inflation is still raging and Fed was unable to give any sign of pivoting. Also, there is no way to know if another Lehman Brothers event would happen. It is definitely not the time to relax.

DOW lose about 2%. So did S&P 500 & Nasdaq as shown in this table. The VIX rose slightly which signaled the market was not in fear. It would appear that the market was disappointed about the US Mid-term election result and now awaiting the result of today's inflation figure to chart its next move.

It has been forecasted that the CPI inflation figure will drop to 7.9% y/y.

This DOW chart shown below is telling us that it has 3 candlestick gaps (gap1, 2 & RGap4) to cover. Its movement is restricted between the 200MA and R6. The inflation figures today would be important to decide if it should break R6 to cover Gap1 or proceed to cover Gap2 and test the 50 MA.

Some analysts were optimistic to expect better inflation figures when they presented this chart below showing the US's M2 money supply has taken a drastic turn and this might have tamed the US's inflation. Bearing unforeseen circumstances, the position right now is still in favor of the move to break R6 and cover Gap1.

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04 Nov 2022: Can Fed create soft landing?

This Fed chart must have been seen by many who predicted that a recession will always follow after Fed raises its rates.

Click to enlarge the picture

The chart shows that Fed raised rates in 1998 in order to curb inflation caused by Japan Bubble. As a result, the US economy suffered a recession around July 1990, and the recession ended in Feb 1991. The other US recession and their details are tabulated in this table for easy reference.

We can readily see that the US recession always started after each and every Fed rate hike and always after Fed started to reduce the rates; this is also when the 10-year minus 3-month yield curve started to rise. Hence, most market players are always quick to point a finger at Fed for causing the recessions.

Maybe we should ask the question about what would happen if the Fed did not take action to curb inflation and allow inflation to take its own course. Some analysts were of the view that unemployment could spiral with the lowest earners sustaining the biggest impact. This could cause social unrest as a result.

Maybe Fed could "engineer" a soft landing using available tools such as QT to please everyone. This has never been done or happened before but who knows, Fed could create history this time.

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03 Nov 2022: Fed Playing "Taichi"

DOW closed 500 points lower on Wednesday after Powell hinted that rates might go higher. Earlier on, the market was of the view that the Fed may slow down the pace of tightening after reading the Fed's statement.

However, there was no fear in the market as shown by the S&P 500 VIX. VIX rose only a mere 0.19% and the DOW's trading volume was not exceptionally high. This suggested that the market players were taking this market price drop more like a market correction.
Going forward, we are expecting DOW to retest the 200 MA and if successful, make attempts to cover up Gap1. Before doing so, it might even test the 50 MA if the correction is worst and deeper than expected.

30 Oct 2022: Major Decision Ahead

Dow closes 800 points higher on Friday. This time, it broke the 200 MA resistance and parked just above R5. It is ready to scale higher highs if Fed and the economy allow it to do so. It is expected the coming Fed's decision on rate hikes will make or break this rally.

The oil & natural gas prices, and the Baltic Dry index have more or less dropped to an acceptable level. So far, the oil price has come down by 25% from its recent peak; natural gas by 35%, and the Baltic Dry index by 54%. These are the "culprits" of global inflation.

On the other hand, the interest cost of the US debt has risen so much higher and so very fast lately. It must have caused concerns to some of the US administrative offices.

The market is presently expecting Fed to be less hawkish in the coming announcement on 2 November. If it is so, we will expect DOW to break the last resistance R6 and make attempts to cover up gap1 as indicated in the DOW chart.

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28 Oct 2022: Testing Resistances

DOW finally managed to overcome the R2 and R3 resistances and covered up Gap 2 as shown in the attached chart. In the attempt, it failed to break R4.

Going forward, we expect DOW to continue its attempt to test R4 after which it will want to test the 200 MA. If successful, it will test R6 and proceed to cover up Gap1 as indicated. This view is supported by:

a) US 10-year yield dropped by more than 10% since 24 October and the 10-year-2-year spread started to improve after hitting the all-time low of -53% on September 19;

b) The oil, natural gas prices, and Baltic Dry index that are responsible for the inflation have been easing for the past weeks. The present Fed monetary decision thus far has affected not only the economy but also the pockets of the citizens. Presently, labor productivity (output per hour) in the US is at an all-time low as indicated in the following chart. As a result, the market was expecting Fed to be less hawkish in the coming FOMC meeting when making the monetary decision. Fed's coming monetary decision on 2 November will make or break the present rally.

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25 Oct 2022: VIX Going in Tandem

Traders must have noticed an unusual happening in the US stock market. On a rare occasion, they witnessed VIX, the Volatility Index, rose in tandem with the stock market as shown in the following table.

Clearly, there is a "disagreement" in the pricing between the stock and call/put option trading. But is it something we should be very worried about?

We are all aware that VIX is worked out using the pricing from the call/put options. Usually, VIX will move inversely to the stock market. That is, when the stock market is up, the VIX will go down.

For information, this "disagreement" in pricing also happened in 2018/19. Then there was also a rate hike which peaked around the end of December 2018 for the market to bottom out.

It would appear that this sort of "disagreement" will happen whenever the market players are not definitely clear about the market direction. This is especially so when the rate hike announcement is just 8 days away on 2 November. So far, the market has known to price in the 75 bps rate hike. But what's rate hike to expect in 2023 and beyond is still a guessing work. Just like in 2018, the market will be expected to bottom soon if Fed were to announce a rate hike easing in 2023.

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22 Oct 2022: Safe to Enter the Market?

DOW climbed 750 points and parked itself at 50 MA as shown in the attached chart.

The oil & natural gas prices, Baltic Dry Index, and Gold prices are all easing except for the yield prices. Many traders might have thought the worst is almost over. But is it so?

The Financial Times (FT) reported that the market now expected Fed to raise rates to 5% next year and this rate of 5% has been fully priced-in.  But that information does not help to judge when will be the time to enter the market.  

One way to judge when is the best time and safe to enter the market for longer-term investment is to use the Advanced Decline chart.  In this example,  we use the S&P 500 Advanced Decline % chart as shown below.  If one plots the chart in cumulative mode,  one should be able to judge when is the best time to enter the market.   This is when the Advanced Decline % line breaks up the channel as shown.   In this example,  we also see how the June-August rally failed to take off after breaking up the channel.

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19 Oct 2022: Timing to Enter Market

The U.S. stock indexes rallied for a second day because of the better-than-expected earnings. The easing news about UK Government trying to resolve the turmoil in the UK also lifted the investors’ confidence. DOW went up by another 1.12% as shown.

On the chart, we see DOW breaking the trendline T2 nicely for the first time since August without creating any candlestick gap. It looks like the market players were determined to bring the DOW further up to scale higher highs. However, the very low fall of 2.77% in the S&P 500 VIX does not bode well with the rising signal the market players were giving.

Going forward, we expect DOW to continue testing the various resistances as marked red in the above chart including covering up Gap2 on the way. We will be watching S&P 500 VIX carefully before verifying if the market is safe for longer investments.

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14 Oct 2022: Last Engulfing Bullish Reversal

The US market was spooked during the early trading session when a slightly stronger CPI figure was released around 20:30 hrs on 13 October. The expected CPI figure was 8.1 whereas the actual figure was 8.2. At one stage, DOW's losses were more than 2%. It gradually rose to end the session almost 3% up from the last trading session on 12 October. This enabled DOW to:

a) Break the resistance;

b) Form the "last engulfing" bullish reversal pattern

c) Covered up Gap4 as shown in the following chart:

Going forward, we expect DOW to make attempts to break the trendline T2. It might want to retest Support1. Serious traders thinking of entering the market again should wait until the DOW's uptrend is confirmed by the breaking up of the trendline T2.

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12 Oct 2022: About the US Inflation

The runaway US inflation in recent months caused Fed to hike Fed Fund rate 5 times in the past 7 months since March 2020. Many claimed that the rate hike this year is rising faster than any other rate hike in recent history. So far, DOW lost about 20% and the S&P500 lost more than 25%.

Lets examine the Fed's 5-Year, 5-Year Forward Inflation Expectation Rate (T5YIFR), a chart that was claimed to be used often by Fed to judge the inflation rate in the past.

click picture to enlarge

From the chart, we could see that Fed has many times introduced rate hikes whenever the T5YIFR crossed the 2% line (marked in red); also, Fed reduced the rate when it crossed under.

For some reason, Fed stopped doing this during the period between Jan 2021 and Mar 2022. This might have caused the present inflation rate to "run away" as illustrated in the following chart:

Going forward, we are expecting the US inflation rate rise to slow down because the oil price has been easing in the last few months

8 Oct 2022: Good News Are Bad News

DOW lost over 600 points or 2.11% after breaking the support1 and covering up the candlestick Gap4 as shown attached.

This sudden decision to reverse its course was due to a good US Job report released by the US Labor Department on Friday. The Nonfarm payrolls increased by 263,000 for the month and the unemployment rate was 3.5%. The good news has now become bad news. The market players are now speculating that Fed will be hawkish when making the next rate hike decisions in November.

Going forward, we are expecting DOW to make attempts trying to break up again with or without covering up the runaway gap, RGap4. We will be looking out for the CPI report on 13 October. We are beginning to see that rate hikes are working to cut down inflation as long as the oil price remains steady at around the USD 90 level.

6 Oct 2022: Mid-Day Jump

DOW jumped about 300 points after 3:00 pm on 5 Oct to end the session at around 30,270. It closed the day's session with the loss reduced to only 14% as shown.

According to a Bloomberg report, a fairly large Option Trade had caused this sudden jump and it came just when there was a report about US gasoline prices in California heading down toward the 2021 level as indicated

Chart-wise, we found DOW left many candlestick stick gaps uncovered. There were also many resistances and a trendline to conquer before DOW could cover Gap1 and scale higher highs.

Going forward, we would expect DOW to challenge Trendline T2. failing which it will want to retest the support at 29,900 & cover Gap4.

30 Sept 2022: US Inflation Dropping?

There are signs that US inflation is dropping. This is because crude oil price has dropped by USD40/= or 33% per barrel from USD112/= per barrel in June 2022 to about USD80/= per barrel in Sept 2022.

As a result, Fred's 5-year Forward Expectation rate has also dropped as shown in the following chart:

The drop in fuel oil prices also brings down the shipping rate as we see the container shipping rate falling from China to the US.

What's left that could drive up the inflation is the natural gas prices. We are seeing that the US natural gas market is easing and now, the price has also begun to fall.

With the inauguration of the Norway-Poland gas pipeline to cut dependency on Russia, we are likely to see the European natural gas shortage be eased after this winter.

Going forward, we could also expect the US's inflation to ease slightly in the near future.

29 Sept 2022: Will History Repeat?

The US market rose almost 2% on 28 Sept 2022 after losing about 7% over the last 2 weeks. The demanding question most would ask is where the US market would go next?

Many traders are betting with this chart in mind

The chart superimposes the 2008 and the present SP500 chart which supposes to say that the present take-off mimics the 2008 chart and a deep fall is expected to come very soon.

We all know that the deep fall in 2008 was caused by the collapse of Lehman Brothers. Then there was a subprime problem plus the banks were over-leveraged. Today, there were no such problems.

Nonetheless, it is still worth the while to take extra precautions if one has decided to take the risk to enter the market. One should always expect the unexpected at the moment.

27 Sept 2022: Testing the Lows

It is another day where we see the US markets testing their lows. This time, S&P500 & the DOW Small Cap just managed to touch and S&P also briefly crossed the June low.

All the US markets were having average trading volume as shown in the following chart. This could mean that the market players were not too serious about breaking the major support at this time.

Going forward, we should expect the US markets to test and retest this June low but we should also expect the market to re-bounce from this level as the markets are in terribly over-sold states at the moment.

This Twitter was very optimistic that a re-bounce in the US market is in the making. His chart shows that there were 3 occasions in the past when the market has re-bounced from its lows when the present level of 152 in the McClellan Oscillation Index has been hit.

Doubleclick chart to go to webpage

26 Sept 2022: Fed Induced Sell-off over?

The market players strongly believed that the recent Fed-induced market sell-off was not over yet. Some were expecting the market to mimic the September 2008 fall where Dow dropped another 67%% after having dropped about 29% from its peak of 14,200.

However, all these predictions could come true only if there is a following-up event like Lehman Brothers that happened in 2008 to happen in the near future; otherwise, we would expect the market to fight for "survival", and keep coming back up before going down again.

The following is a S&P 500 chart showing how the Lehman Brothers event affected the stock movement in 2008.

During the sell-off in 2008, the market always re-bounced whenever the % of stocks above 50 DMA hit the 20% mark. It only failed to re-bounce when the Lehman Brothers event erupted in September 2008.

The Lehman Brothers event happened because there was a subprime crisis going on with most US banks having very high bank leverage ratios. Then Lehman Brothers was having a leverage ratio of 30 to 1. Merrill Lynch was at 26.9 to 1.

A bank leverage ratio is one that measures the ratio of banks' assets to owners' equity. A good & healthy bank should have a leverage ratio of around 10-15. Today, the US major banks are all within or above this healthy level.

Now let's examine the same chart for the period in 2022. We are again having the % of stocks above 50 DMA hitting the 20% mark

Therefore, unless we have a similar or larger event than Lehman Brothers happening today, it is only reasonable to expect that the market will fight for "survival" & keep coming back up before going down again. It will not drop drastically like in 2008 in a matter of a few weeks.

24 Sept 2022: One Down 3 to Go

DOW broke the support line last night as shown in the following chart while the other 3 major indexes in the US market are still hanging around, undecided. The trading volumes were low for all the US trading markets. That signifies the DOW's breaking of the support line might not a significant issue and the US might still have a chance of recovery unless all the other 3 major indexes are also showing the sign of stress.

But on the other hand, the market players at the options table were not so optimistic. Bloomberg reported that "there were more than 33 million bearish contracts changing hands, the busiest session since 1992."

Chart-wise, DOW has unfinished 3 unfinished candlestick gaps to cover as shown in the following chart. It has also a runaway gap, Rgap4. which was created on 9 Nov 2020, the day when Pfizer/Biotech announced that their vaccine was more than 90% effective.

In view of the above, the market could have the following options

1) Go back and finish up the unfinished business of covering up the 3 candlestick gaps;

2) Proceed to cover up the Rcap4, then go for option 1;

3) Cover up Rcap4 and proceed to go further down.

As the market is presently heavily oversold with the % stock above 50-day (DOWA50R) hitting the limit as shown in the following chart plus the breakdown of the DOW's support line is not a significant one volumetrically, it is only reasonable to assume that DOW will make attempt to test & challenge the support1 with or without covering Rcap4.

21 Sept 2022: S&P Leftover Gap Covered

With the help of the Fed's 75 BSP rate hike, S&P 500 managed to cover up the leftover candlestick gap1 as shown.

As there are leftover Gap2 & Gap3 to be covered, the options for S&P 500 will therefore be as follows:

1) Going back to cover Gap2 & Gap3 before deciding what to do next;

2) Continue the descent to test Support1 before hitting the target1 3,580; (see note1)

As Fed has just raised the Fed Fund rate, it is very likely the traders will go for this option2 because no one can ascertain how the new rate will affect businesses and the economy. Moreover, S&P has also broken the trendline TL which is the low part of a symmetrical triangle pattern tracing back all the way to 2020 as shown in the following chart

Note1: target1 is the target price projected from a Head and Shoulder pattern occurring earlier.

20 Sept 2022: Unfinished Business

The US market did not finish and complete the covering up of the candlestick in S&P 500 as shown in this chart

It is expected that the US market will want this candlestick gap covered. The market might want to test the support @ 3,764 before deciding what to do next.

19 Sept 2022: Preparing for FOMC

FOMC members met yesterday and their result announcement will be on Wednesday, 21 Sept 2022 at around 2:00 pm EST.

The US market will usually react strongly, sometimes, violently to the FOMC announcement. It is always good to know what to expect beforehand.

There were market rumors that Fed always refers also to the following chart when making their decision.

Doubleclick chart to go to Fred Webpage

The above chart shows the "5-Year, 5-Year Forward Inflation Expectation Rate".

The chart shows that the 5-year rate went up from a low of 1.92% on 20 Jan 2022 and peaked at around 2.67 on 21 Apr 2022. The rate went down to 2.22% but went up again when Fed made its 75psb rate hike on 16 Jun 2022. The 5-year rate stayed stubbornly high after that until 30 August 2022. It is now @ 2.24%.

For the last 4 Fed rate hikes as marked in red line, we can see

a) The 5-year rate was either climbing higher or very high on the very day when Fed made its announcement;

b) The present-day 5-year rate of 2.24% is not only one of the lowest but also on its way down from the peak.

With the above in view, one would expect that the Fed might be a little less hawkish when making the rate decision this time round; moreover, the crude oil price was down by 10% since the last Fed rate hike on 27 July 2022.

16 Sept 2022: Leftover Gap closed

This leftover gap named "Gap 2" was covered and closed. In doing so, it has created more candlestick gap 6 as shown. Gap 5 was created because the inflation rate report showed prices rose more than expected last month. Gap 6 was formed when there was a warning from FedEx saying that "the macroeconomic trends have "significantly worsened." As these 2 candlestick gaps are created due to market fears, they are not run-away gaps, therefore, they would be covered up sooner than later when the fear is subdued.

13 Sept 2022: Surprising Inflation

The U.S. market was surprised to see a stubbornly high inflation reading in August. They were hoping for a lower inflation figure due to lower oil prices etc.

The market players are now expecting another historic & super-sized interest rate hike to come when Federal Reserve policymakers meet next week. As a result, DOW lost a total of 1,278 points, the 10th lowest since January 2011 in terms of % losses.

Chart-wise, we saw DOW created yet another candlestick gap, Gap No 5, after ending the session just below the last low of 32.148 on Sept 6, 2022.

Unless there are surprising market movements, we should expect the market players would take the opportunity to cover up Gap2 just before the coming FOMC meeting on Sept 21, 2022.

11 Sept 2022: Market Always Rises After Inflation Peaked

For some reason, the US market has a habit of rallying after every inflation peak of more than 5% for the past 50 years. This is illustrated in the following chart.

Doubleclick for enlarged picture

It is very likely that this phenomenon will repeat again and again until we are no more in the secular bull market. The reason could be because Fed would always remove the monetary tightening once the inflation is abated. Whether the market will rally after that will depend much on other factors that had also threatened the economy.

Presently, there was a speculation that Ukraine war might come to an end soon.

9 Sept 2022: To buy or not to buy?

DOW was losing about 8.8% or about 3,000 points from a high of 34,152 on 16 August to a low of 31,148 on 6 September. It then rose about 3.2% to the present level of 32,151 on 9 September 2022.

There was no particular news about why there should a rally at this time when Fed said it was determined to fight US inflation by further tightening the monetary policy. Some Analysts thought it was just a short covering because the market has hit the sensitive lower limits of 50-day and 200- day moving average markers as shown arrowed red in the attached chart.

As to whether it is the right time to enter the market will depend much on the risk appetite of investors at the moment. This is because:

a) The Fed has an unfinished monetary tightening to carry out to tame inflation;

b) There is still a leftover candlestick gap (Gap 2) yet to be covered as shown in the earlier charts

c) Except for the lower oil prices, there isn't much good economic news that could excite the market.

For those Long Term Investors sitting on the fence, it might be worth the while to wait until the market has given a clear buying signal.

3 Sept 2022： Expect the Unexpected

This term, "Expect the Unexpected" has been used all the time. Many did not expect the "Lehman Brothers Event" to happen in August/September 2008. People are not also expecting the "Coronavirus event" to happen in February 2020. There were signs before these event happened but many of us ignored them completely.

As an investor, we must always be ready for the worst-case scenario. Sometimes, Charts can help us identify this kind of event. One of them is as shown.

The chart, drawn in log scale, used channel lines to show clearly the 2 unexpected events, namely the Lehman Brothers and the Coronavirus events.

If history could be of any guide, we should expect another event to happen if the SPX were to break the "middle" channel line. This event or events might happen especially because we are now in an "irrationally exuberant" global economy with asset values unduly escalated in many places of the World.

31 August 2022: The "Saga" Continues

The last Friday's "Jackson Hole" Terror continues to plunge the US stock market in the last few days. DOW has lost about 4%, breaking the "support 4" as shown in this chart. Should it break "support 5", DOW should be able to cover "Gap 2" before making any further decision.

September month is usually a bad trading month in the US. Investopedia said, "Since 1950, the Dow Jones Industrial Average (DJIA) has averaged a decline of 0.8%, while the S&P 500 has averaged a 0.5% decline during the month of September". The next FOMC is about 20 days to go on 21 September, we might be able to see a lot of market actions before that very date.

26 August 2022: "Jackson Hole" Terror

DOW lost 1,008 or more than 3% at the end of Friday, 26 August. It is the highest loss since February 05,2018 when DOW lost a total of more than 1,175 or about 4.6%. Then, there were fears about the rising interest rate and also fear about the economic downturn caused by the Fed's QT which just started in the fall of 2017. This sounds exactly like what happened nowadays.

The present market fall was caused by Fed's Chair, Mr. Powell who delivered a very hawkish speech at the Jackson Hole conference.

Chart-wise, DOW broke 2 supports, support 2&3, at one go. Judging from the market sentiment, DOW is now looking more determined to proceed and cover up Gap2 as shown.

Just a little note: DOW might take some time to cover the gap. The last time happened in 2017/18, it took more than 1 year to cover the leftover gap.

Afternote: That gap on 11 September 2017 appears to be a "runaway" gap because that was the day in US history when Congress approved the food stamp. The Gap2 as shown in the above chart was more caused by market speculation after a stretch of down-days plus easing fear about the rate hikes. Therefore, it is likely not a runaway gap and might be covered sooner than before.

25 August 2022: "Jackson Hole" Hope

The US market players were excited when they knew the U.S. Federal Reserve Chair Jerome Powell would deliver his Jackson Hole speech on the economic outlook tomorrow, Friday, 26 August 2022.

DOW jumped about 1% or over 300 points to "park the price" right at 33,200, which is the support1-turned-resistance as shown. SP500 & Nasdaq also jumped.

The market is now "all ready" to cover up Gap 3; however, analysts at RBC Capital Markets said there was a sign for the U.S. stocks to head for another "blowup". CNBC was skeptical by adding that the Fed watchers were not expecting much from the Fed chairman.

back to top

23 August 2022: Starting to descent

DOW started its descent with a "bang" of more than 600 points yesterday after breaking the red trendline. It has also broken the Support1 which was not marked earlier. In addition, it has created a new candlestick Gap3 as shown.

With the creation of Gap3, the following options become available:

1. Cover up Gap 3 immediately;

2. Cover up Gap 1 before covering Gap 3;

3. Proceed to cover up Gap1, and test the other supports to cover Gap2 before coming back up to cover Gap 3;.

From the observations of the other trending charts, it would appear that the traders were creating Gap3 for the purpose of returning back after having covered Gap2. Also, if they wanted to cover Gap3, they would have already done so during the trading session.

The observations also support option 3 to be a likely trading option at the moment unless another incident like the "2008 Lehman Brothers" event were to happen again.

20 August 2022: About to descent

The US stock has reached the overbought region and is ready to make a descent. The descent will start as soon as DOW breaks the red trend line as shown. Thereafter, it will try to cover gap 1 and test the support @32,387 as shown.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

Why Power Cut in Sichuan & Chongqing?

noreply@blogger.com (Sky Juice) — Wed, 31 Aug 2022 01:25:00 +0000

30 August 2022

China has a widespread power cut in 2021 when there were coal supply shortages. Millions of homes, factories, and businesses were affected.

This year, Sichuan and Chongqing have power cuts again. This time, it is because of searing heat and severe droughts.

Why?

This is because Sichuan and Chongqing rely heavily on hydropower. The dry weather and drought have the main reservoirs drained. Many sections of the Yangtze River reached their lowest level which was never seen after the severe drought in 1865.

Power Sources?

The whole of China

Sichuan Area

Therefore, if there is a drought, Sichuan and Chongqing will suffer power cuts.

How Serious?

The situation is quite critical at the moment. This is because the largest hydropower station, the 3 Gorges, is running low on the water supply as can be seen from this chart.

Doubleclick picture to go to the original webpage

The chart shows that the water inflow rate was very low and declining steadily while they triggered the outflow in a seesaw manner probably just to keep some flowing water for the Yangtze river. The water level had reached the critical level of 145 meters which is quoted to be the minimum water level for proper power generation.

The chart was projecting a rising water inflow for the coming months.

Why other Power Stations Not Covering Power Shortage?

It will depend on whether there is a power distribution network available & enough to supply the Sichuan area. As the hydropower stations in the Sichuan area are designed to supply power to the national Power Grid through Extra High Tension @ Direct Current in the region of 500 kV.

As Sichuan is quite remote from the National electrical load Center which is along the Eastern coastline, there might not be a "solid" power feed from National Power Grid.

Presently, the Chinese Government is trying to alleviate the power shortage in the Sichuan area by constructing a 500-kV transmission network for connecting the ongoing Ertan hydroelectric project to the Sichuan power grid. There are also reinforcing the existing power transmission system

How's the Weather?

In the next 11-14 days (September 9-12), the cumulative rainfall in southern South China, eastern Qinghai-Tibet Plateau, Sichuan Basin, and Yunnan will be 10-30 mm, and there will be no significant precipitation in most of the rest of China as shown in this weather forecast chart.

It is likely that weather will bring some rainwater to the 3 Gorges dam as shown in this chart

Doubleclick picture to go to the original webpage

What about Weather in the Pacific?

There was a Tropical Cyclone Warning on Thursday, 25 August 2022 but it was a false alarm. The government downgraded the typhoon alert to "signal No. 3" and businesses in Hong Kong were back to normal in the afternoon.

There was speculation also that Super Typhoon Hinnamnor will hit the mainland and bring lots of rain of water. That too will not materialize as this latest picture shows that Typhoon Hinnamnor will deflect its path when it hit the Taiwan island.

What about Year End Weather?

This chart shows that China has a maximum rainfall around August of each year. The rainfall will reduce towards the end of the year.

Doubleclick to go to the original webpage

Conclusion

The shortage of water supply for hydropower generation in the 3 Gorges could still linger till the end of the year unless there is a sudden change in the weather in the southern part of China.

Simple, Easy-to-Install and Effective Anti-Adblocker for Blogger

noreply@blogger.com (Sky Juice) — Sat, 27 Aug 2022 13:52:00 +0000

27 August 2022

Here is the script for installing a simple, easy-to-install, and effective Anti-Adblocker for those bloggers who don't want AdBlock to read their posts.

Step by Step Installation

1. Sign in to your blogger, in the blogger dashboard as shown, click the side tab "Theme";

2. In the next screen, click the dropdown box arrow, and select "Edit HTML";

3. In the built-in HTML editor, find and locate "</Head>" using Chrome find or otherwise;

4. Add the following script just after "</Head>";

<style type='text/css'>
/* Anti Adblock script */
@keyframes fadeInDown{0%{opacity:0;transform:translateY(-20px)}100%{opacity:1;transform:translateY(0)}}
@keyframes rubberBand{from{transform:scale3d(1,1,1)}30%{transform:scale3d(1.25,0.75,1)}40%{transform:scale3d(0.75,1.25,1)}50%{transform:scale3d(1.15,0.85,1)}65%{transform:scale3d(.95,1.05,1)}75%{transform:scale3d(1.05,.95,1)}to{transform:scale3d(1,1,1)}}
/* Anti Adblock script*/
#arlinablock{background:rgba(0,0,0,0.65);position:fixed;margin:auto;left:0;right:0;top:0;bottom:0;overflow:auto;z-index:999999;animation:fadeInDown 1s}
#arlinablock .header{margin:0 0 15px 0}
#arlinablock .inner{background:#e3482d;color:#fff;box-shadow:0 5px 20px rgba(0,0,0,0.1);text-align:center;width:600px;padding:40px;border-radius:5px;margin:7% auto 2% auto;animation:rubberBand 1s}
#arlinablock button{padding:10px 20px;border:0;background:rgba(0,0,0,0.15);color:#fff;margin:20px 5px;cursor:pointer;transition:all .3s}
#arlinablock button:hover{background:rgba(0,0,0,0.35);color:#fff;outline:none}
#arlinablock button.active,#arlinablock button:hover.active{background:#fff;color:#222;outline:none}
#arlinablock .fixblock{background:#fff;text-align:left;color:#000;padding:20px;height:250px;overflow:auto;line-height:30px}
#arlinablock .fixblock div{display:none}
#arlinablock .fixblock div.active{display:block}
#arlinablock ol{margin-left:20px}
@media(max-width:768px){#arlinablock .inner{width:calc(100% - 20px);margin:10px auto;padding:15px}}
</style>
<script type='text/javascript'>
//<![CDATA[
// Anti Adblock script
function downloadJSAtOnload(){var e=document.createElement("script");e.src="https://cdn.jsdelivr.net/gh/Arlina-Design/quasar@master/arlinablock.js",document.body.appendChild(e)}window.addEventListener?window.addEventListener("load",downloadJSAtOnload,!1):window.attachEvent?window.attachEvent("onload",downloadJSAtOnload):window.onload=downloadJSAtOnload;
//]]>
</script>

5. Save the HTML by clicking the save button;

6. Test out the anti-adblocker on any blog page. If it is successfully installed, the following notice should pop up when the Adblocker is activated when reading the blog post.

Note: The script should also works for WordPress by adding the script into the header.php

How Best to tell if Market has really Bottomed?

noreply@blogger.com (Sky Juice) — Sat, 20 Aug 2022 01:54:00 +0000

18 August 2022

Jump to

This is presently the most pressing question that many would want an answer to. Some chartists speculated that the present US market trend is just like in 2008 when the market is expected to undergo another downtrend or drop before it can recover.

Some went as far back to draw charts and superimpose the charts of 1937, 2000, 2008, and 2022 to prove their points. This article will show how the market has really bottomed and if we should enter the market now.

When will Market Bottom?

The market often considered to have bottomed when there are more than 80% of the stocks hit their 200MA as predicted earlier on 26 July 2022

What if This Happens Again?

The market may cause a secondary bottom and collapse again like it had happened on September 15, 2008, when Lehman Brothers went bankrupt. On that very day, the Dow Jones Industrial Average had lost 4.5%, the largest since the 911 Terrorist attack on the Twin Towers in New York on September 11, 2001.

How to Tell if such a thing will happen again?

To know how to tell, please click the "Reveal" button to see the next chart.

This chart shows that there were 2 events that caused the market failures and did not recover after the market stock hit the 200MA baseline. These 2 events are:

a) Lehman Brother Event (Marked Event 1 in the Chart)

Before the Lehman Brothers event, the market was running on another track in 2007 as shown. The stocks hit the 200MA around March 2008 & recovered. When Lehman Brothers declared bankruptcy on September 15, 2008, the market hit the 200MA again. This time, it went really down under, changing also its course to run on a new track as shown.

b) The Covid 19 (Marked Event 2 in the chart)

This event started by Fed's QT in 2018/19. The market recovered after stocks hit the 200MA in 2019 but it was soon spooked by the Covid19 break out in China. The secondary bottom appeared only after the US Government started up the 3 Trillion USD Covid Stimulus packages in March 2020.

In Conclusion

If there is a similar happening like Lehman Brothers appears this time, it is likely to do exactly the same. It will run down and break the red trend line as shown before recovering. It might also run on an entirely different track like 2008/09 if the secondary bottom were to be as bad as the Lehman Brothers event.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

The Labour Force Participation Rate (LFPR) as Stock Indicator

noreply@blogger.com (Sky Juice) — Sat, 13 Aug 2022 17:31:00 +0000

14 August 2022

The labor force is important in any economy. An increasing labor force indicates healthy economic growth. The scale of labor supply in a country is often measured by the labor force participation rate (LFPR). Therefore, the higher the LFPR, the better and healthier will be the economy and vice versa. Investors often use LFPR to judge an economy before laying out their investment plans.

Examples

Germany

Germany has been regarded as one country that has a better and healthier economy not only in Euro Area but also in the World. In the past 20 years, Germany's participation rate has risen steadily from about 70% to the present 80%. It has managed to maintain positive GDP growth every year except for 5 occasions marked as shown in the attached chart.

Other Countries

The following chart shows the labor force participation rate as listed in the World Bank's record.

G20 Countries

Asian Countries

Where to get the Data

The Best Places

1. Trading Economics

2. World Bank

3. CEIC *

4. Macrotrends *

* likely to be using models to project/estimate when National figures are not available

Why China is not included?

For some reason, China stopped reporting its National LFPR in 2016 as shown in this World Bank Chart.

DoubleClick picture to visit the webpage

One could only read from the model that predicts and projects the latest figure. The last projected figure is 68%.

DoubleClick picture to visit the webpage

Why has China Stopped Reporting Since 2016?

China suffered the weakest annual growth in 26 years in 2016 when it reported a GDP growth rate of 6.7% , down from 6.9 % in 2015. There was a job loss of about 1% in that year according to this chart from Moody's Analytics. Since then, China had not been reporting good labor force statistics. It is not known if this is the real reason.

DoubleClick picture to visit the webpage

The Younger Labor Force

The younger labor force participation is often regarded also as an important statistic to judge the health of an economy. The following World Bank chart shows that China has stopped reporting such statistics since 2010. Most economies have reported lower LFPR after the pandemic in 2020.

DoubleClick picture to visit the webpage

The LFPR & Stock Market

The LFPR might not be the best indicator to track the movement of the stock market but it can be used to predict if there will be a large market movement as shown in this chart. The better indicator to track the stock market is the payroll figure at the moment

As of 14 August 2022, the chart is showing a very healthy LFPR for the US labor market. If not because of the pending Fed's QT in session, the US stock market could have recovered and taken off to make new highs.

Real Time LFPR& Stock Chart

source: tradingeconomics.com

Conclusion

Labor force participation rate (LFPR) has always been used by analysts all over the World to judge the strength of an economy. A rising economy would have a rising LFPR. Of late, many economies are suffering from declining LFPR particularly in the age between 15-24, the younger labor force. China has purposely chosen not to report the LFPR since 2016. However, many analysts still use models to estimate and project this LFPR from China.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

Stock Market of China, Taiwan, Hong Kong and the US in One Chart

noreply@blogger.com (Sky Juice) — Sat, 30 Jul 2022 07:31:00 +0000

30 July 2022

This article is making an attempt to find how the various stock markets in China, Taiwan, Hong Kong, and the US interacted with each other after Mr. Xi JinPing became the President of the People's Republic of China (PRC) in March 2013.

For clarity, this article compares the main indexes of the 4 markets all in one single chart.

What Chart?

This chart was drawn using the performance chart inside stockchart.com.

The chart started by saying Mr, Xi Jin Ping took office in March 2013. He succeeded Mr. Hu JinTao, becoming the 7th President of PRC.

The Achievement of Mr. Xi JinPing

Xi is well known for his anti-corruption practice and the one Belt One Road(OBOR) initiative. Economically, the PRC people see him as a successful President who is behind China's export-driven growth. Xi's achievement must be the reason behind the super growth of the Chinese stock market in mid-2014.

The Chinese Stock Market Bubble in 2015/16

During Xi's term in 2014, the Chinese Yuan or RMB became one of the world's top five payment currencies, overtaking the Canadian dollar and the Australian dollar.

The Chinese traders/investors could have seen it as an opportunity to make some quick money. They were reported to often use borrowed money to buy stock. This unfortunately caused China's stock market bubble to burst on 12 June 2015.

The Chinese stock market bubble eventually ended around February 2016. The Chinese markets have not quite recovered since.

The Hong Kong Stock Market

While the Chinese markets were flourishing to form the bubble, the Hong Kong market remained quite steady, trailing behind the rest of the stock market until the Hong Kong Street Protest broke out in March 2019.

The Hong Kong market dropped about 35% during the Hong Kong Street Protest but gained back about 25% after the introduction of the Basic Security Law on 30 June 2020. But this gain was quickly erased when the Hong Kong Exodus started after the UK government introduced a new visa scheme for holders of the British National (Overseas) passport.

The Taiwan Stock Market

As shown in the chart, the Taiwan stock market had a better time compared to Shanghai and Hong Kong markets. It appears to trace closely behind the US market after 2020.

How Bad is China's Debt Problem?

noreply@blogger.com (Sky Juice) — Thu, 28 Jul 2022 11:02:00 +0000

Latest Brief: 16 October 2022: China presently is having a bank liquidity problem. The World Bank compiled a report indicating that China's bank credit-to-bank deposit ratio was 366%. This means that the Chinese banks were having liquidity problems to cover any unforeseen fund requirements.

Jump to

Other relevant articles:

What is the unemployment rate in China?

16 October 2022: China Bank Liquidity

China presently is having a bank liquidity problem. The World Bank compiled a report indicating that China's bank credit-to-bank deposit ratio was 366%. This means that the Chinese banks were having liquidity problems to cover any unforeseen fund requirements.

The reason could be that the Chinese are not depositing as much for the banks to loan out the money. According to the World Banks compilation, China's Bank deposits to GDP (%) are only 48% of its GDP. This figure is low compared to other countries.

31 December 2021

Reuter claimed that China's debt has risen dramatically largely due to the credits offered to the state-owned enterprises. It claimed that this debt has threatened China's stability, slowing down the economy and the stock market growth. However, many are not convinced. They argued that such fear is overdone. Let's examine what the statistics and charts are telling us.

How much are the Debts?

Reuter in this article indicated China's Total Debt is about 250% of GDP.

Source: Reuter

Reuter explained this debt level is not too high when compared to Japan's 370%. However, the rate of rising has fastened; otherwise, China's debt appears to be normal & manageable.

But Reuter went on to say that was not the case for Domestic or Corporate Debt. The debts without counting the Government's debts have gone way above the rest of the countries. This is particularly obvious as shown in this chart.

Source: World Bank

The chart is showing that China's Domestic credit is mimicking the path of Japan about 20 years ago, during which time, Japan was embarking on its journey to the "lost decade".

As China's GDP in 2020 is about USD14.7 Trillion; hence, for the 182% GDP debt, each Chinese of 1.3B people owed the Chinese banks about USD20,000 in 2020.

Domestic debt is defined as gross securitized government debt, including treasury bills, bonds, notes, and government stocks.

What about Hong Kong & Macao?

If the Domestic debts in Hong Kong and Macao are low, it might help China to balance out the Corporate Debt; but the debt situation in Hong Kong and Macao is even worst as shown in the following chart.

Source: World Bank

The following is the bar chart showing China and its SAR regions' Domestic debts by Banks against other countries or areas. China's Domestic debts by Banks are about 40% higher than the UK and 60% more than Japan. The SAR's debts are much higher.

Source: World Bank

What do the Stock Markets say?

Presently, the 3 big stock exchanges are showing mixed results. Shanghai Composite (SSEC) is trading around the upper trend line of a symmetrical triangle according to the weekly chart as shown below. Hong Kong HSI has just broken down the lower trendline and Shenzhen is seen climbing up the lower trendline.

The Technical Analysts will usually say the trend of the market will be bullish if the index can break above the symmetrical triangle or vis-visa. This is exactly what the monthly SSEC index is about to do and Shenzhen has done recently. But there was no appreciable volume supporting the two break up movements; meaning, the stock rising of the index was weak and the index might reverse its course at some future time. As for Hong Kong HSI index, it has a false break up earlier. It is now heading downwards after breaking the lower trendline.

Overall, we are expecting SSEC and Shenzhen indexes to continue moving up to test the resistances, failing which, we will expect these 2 indexes to move downwards. As for HSI, we are expecting it to make a move to retest the lower trendline that it has just broken.

Conclusion

China, as a country, might have manageable National Debt but one cannot say the same for the Domestic or Corporate Debts which is now the highest in the World. It would be a concern to investors to watch out as some very big private property developers have defaulted their interest payments recently. Any action by China's banks to limit their risk on the loans given to the private sectors would have serious repercussions for the stock markets, not only in China but also all over the World.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

=======================================================================

added notes: The differences between debt and credit.

The main difference is that debt is what one owes and credit is what one has borrowed. Credit cards or loans are credit products of banks. Interest is charged on the total amount of money borrowed. Loans have a longer term, usually of years. If one has a credit line, one would usually borrow to the limit allowable during bad times and becomes one's debt.

Update: Realtime World Bank Charts

Domestic credit to the private sector by banks (% of GDP) - China, United States, Japan, Euro area

Domestic credit to the private sector by banks (% of GDP) - China, United States, Japan, Hong Kong SAR, China, Macao SAR, China

Update: Non-Performing Loan (NPL)

The NPL of the banks will affect the country's economy. When a country ignores its NPL problem, its economic performance will suffer.

The banks' NPL is an indicator of a debtor’s inability (or unwillingness) to pay the bank. A high NPL will become a burden for both the banks and the borrowers. It traps valuable collaterals. Any unresolved debts will make it more difficult for debtors to obtain new funding for their investments. The banks on the other hand will have to bear the cost of NPL Its balance sheets and profitability will be greatly affected. Allow NPL to be unchecked, it will affect the country's economy.

Italy faced economic problems when its NPL ratio reached 17% in 2018. Greece almost went bankrupt when its NPL ratio hit 46% in 2017. Across the European Union, NPL ratios have doubled between 2009 and the end of 2014.

China's present NPL ratio is around 2%. This is a very healthy figure. But, many property developers are presently heavily in debt. Today, they manage to stay above water; tomorrow, some are expected to go bankrupt.

Presently, real estate development in China contributes about 14-15 per cent of China's GDP. If construction and other related industries are included and accounted for, the contribution could exceed 25 per cent of GDP.

Update: 1 May 2022 : 70% of Households are in Debt

In China, about 70% of households are taking up bank loans to buy housing and apartments. Of late, housing prices in China have dropped drastically, Newly built houses today cost only about 1/3 of the price about a year ago. Going forward, it is likely to see the Chinese Government trying to save the housing market & the banks that loan the money. One would expect the Chinese stock markets to fall again soon.

Update: 31 May 2022 : Videos Testimonial about Debts

Update: 1 July 2022 : Debts incurred since

Xi took office

China's domestic debts were 134% of GDP (9.57 Trillion USD) when Xi took office in 2013 as Chairman of CCP. The debts ballooned to 185% of GDP (14.72 Trillion USD) after 7 years in 2020. So the increase in domestic debts in China was around 14.43 Trillion USD (14.72*185% - 9.57*134%) since Xi took office in 2013. This roughly works out to a debt increase of around 2.0 Trillion USD per year or 166 Billion USD per month.

The following will show one of place where the debt money could be coming from.

Update: 5 July 2022: Where will China be Heading?

Debt is just like the opium; once addicted, the habit is very difficult and painful to kick.

The Japanese domestic debts reached the same level of 185% of GDP (4.5 Trillion USD) in 1999 & the domestic debt was about 8 Trillion USD The Japanese must have felt the pain of these domestic debts. To resolve this, they slashed the interest rate to negative in order for its people to refinance their debts at much-reduced interests. They managed to reduce the domestic debts to less than 100% of GDP in less than 3 years. But, they lost nearly 20 years of growth thereafter as shown in this attached chart. Historians often term this Japanese loss in economic growth as Japan's "Lost Decade"

Will China suffer the same fate as Japan?

Going ahead, China will need to be very careful in managing its domestic debt. There is a tendency for the debts to explode as evidenced by the bond defaults by big property developers like Evergrande and Shimao. The banks too are not in good shape. The smaller local banks are presently restricting depositors from withdrawing their savings to save bank runs; the larger one like Nanjing Bank has rumours that their off-balance sheet items are not that healthy.

Many must have borrowed from the banks to finance their housing. These people can be very unhappy and reckless if they have no money to pay the bank interests & they are jobless with the banks or developers chasing after them.

It would be harder to expect China can manage its exploding domestic debts better than Japan because:

a) Japan has a longer growth history than China before they faced the "lost decade"; also,

b) The Japanese did not have a long economic enemy list; lastly,

c) The Chinese domestic debt is nearly 3 times larger in value (China domestic debt: 26.79 Trillion USD in 2020; Japan domestic debt: 8 Trillion USD in 1999).

Update: 28 July 2022: Latest figure on Chinese Domestic Credit Debt

Ceicdata.com has the latest data on Chinese Domestic Credit Debt as shown attached.

The data shows that the Chinese domestic credit debt has risen to USD 42.7 Trillion in June 2022. It has been rising at a rate of about 10% per year. Based on a population of 1.4 billion people, this debt is about USD 30,000 per person. Interest based on 5% will be roughly USD 2.1 Trillion or about 20% of 800 million people's salary @ around USD1,100 per month.

This debt of USD 42 Trillion is about 250% of China's GDP @ USD 17.6 Trillion; in other words, China's domestic credit debts have increased 68% of GDP in a short span of 2 years from 182% in 2020 to the present 250% in 2022.

Because people have been borrowing money heavily, the Chinese banks' bad loans have increased by almost 107 billion yuan (USD 15 billion) in the first half of 2022 to 2.95 trillion yuan (USD 430 billion), according to the CBIRC.

As the economic recovery was slow in 2022, it is expected the Chinese banks' non-performing assets could increase by 25% to 7.5 percent of total lending by the end of this year, The actual non-performing assets of 6 percent last year.

Update: 5 August 2022: Money Printing

Every country will need to print money to cater to the expansion of its economy.

The faster they expand their economy, the more money they will need to print. If a country prints more than to cater to the economy; for example, to handle the debts or to loan out money to the rest of the World, it will show up in this chart maintained by the World Bank.

Source: World Bank

The chart measures the "broad money" circulating in the economy. If a country prints money more than last year, the chart will show an increase as % of the GDP.

The chart shows that Japan is the country that has printed the most money to handle its rising debts; it has printed about 2.8 times the size of its economy. It is closely followed by China, which started printing in the '60s. The printing exceeded the US in 1990 and has never looked back since.

What about Hong Kong and Macau?

Hong Kong and Macau have printed very much more than Japan. Today, Hong Kong's broad money is 4 times more than the size of its economy. Hong Kong is followed closely by Macao which has increased money printing by 1.8 times in 2020. Both Hong Kong and Macao increased their money printing since China took over the counties in 1997.

Update: 6 August 2022: Outflow of the Rich

Straits Time reported last Tuesday saying the rich Chinese are eyeing to move to Singapore. Henley & Partners, a global investment firm in residence and citizenship, predicted the number of China’s high-net-worth (HNW) individuals leaving the country could become more pronounced this year.

Fortune.com put the figure of around 10,000 HNW, taking with them USD $60 billion in wealth when they leave.

(Doubleclick picture to read the Straits Time news)

The World Bank data as shown in the attached chart clearly indicates that China's GDP growth rates have slowed down recently to 0.4%. The Chinese economy has been slowing down very fast in the last 20 years at a rate of about 10-12% a year.

The Chinese GDP is likely to become stagnant or go even below water in the years ahead. This is because China has a domestic credit debt of about 250% of GDP at the moment. It might mimic the "lost decade" of Japan. Japan started its economic recession in 1999 with a staggering domestic credit debt of about 185% of GDP. It has since lost about 20 years of economic growth.

Update: 20 August 2022: The Lost Decade

Japan lost not one decade but two decades of growth after its Domestic Credit Debt hit about 187% of GDP in 1999. Before then, the housing price already started falling as shown in this chart. This is also felt present in the Chinese economy. The Chinese Housing prices started to fall in Q3 of 2021.

The Danger of Margin Trades

noreply@blogger.com (Sky Juice) — Mon, 18 Jul 2022 02:16:00 +0000

8 August 2018

Jump to

1) Update: 12 August 2018 CFD, a form of Margin Trade
2) Update: 10 December 2021 Margin Trade today
3) Update: 13, 15 & 17 December 2021 Interest hikes
4) Update: 19 December 2021 Interest rate vs Margin Debts
5) Update: 18 July 2022 The Possible Next Market Move

Other Relevant Articles

Use McClellan Summation Index to improve trading skills?

What is Margin Trade?

Simply put, it is a trade that one borrows money from brokers or bankers to buy stock in the stock market or a currency in a Forex Exchange. Here is an explanation video

So What is the Danger?

Actually, there is nothing dangerous about Margin Trading. It is just a financial tool that investors can use as leverage to buy more stocks or currencies.

There is a danger only when the investors become very greedy, starting to trade margins above their means, borrowing more and more margin until they cannot pay up when the brokers or bankers initiate a "margin call".

What is a Margin Call?

A margin call happens when a broker demands that an investor deposits more money or securities so that the margin account is brought up to the minimum maintenance margin. A margin call often happens when there is a market crash and the account value falls below the broker's required minimum value.
When there is a margin call, the investors are often given little time to do the "top-ups". In the event that the investor cannot top up the account within the stipulated time, his brokers or bankers will have to right to dump all his stocks or currencies in the market at ridiculously low prices to recover their losses.

Why do I have to worry?

Rightly, one need not worry much if one does not “play” margin trades; however, one would have to worry when the margin trades in the market are running out of every proportion with a possible risk of causing a market failure. This is when margin debts will be so high to cause en-masse margin calls that will cause markets to collapse.

Can Give Example?

1. The SGX’s Penny Stock Market Crash in 2014

A Malaysian businessman and his partners manipulated the market and caused the price of 3 Nos of SGX’s penny stocks; namely, Blumont Group, LionGold Corp, and Asiasons Capital, to surge by more than 800 per cent in less than 9 months in 2014. A Singaporean trader by the name of Quah Su Ling took up a margin loan of a very big amount from Goldman Sash London. When the price of the 3 penny stocks fell on Oct 2, 2014, Goldman Sash demanded Quah to top up $48 million in her margin account within one and half hours and started selling her stocks. Over the next 2 days, $7 billion were wiped off from the 3 SGX’s penny stocks. Blumont and Asiasons’s share prices dropped from a peak of S$2.0 to less than 1.0 cents in weeks. This caused the SGX's penny stock market to crash. The details are covered here

2. Stock Market Crash of 1929 - Buying on Margin

It was speculated that Margin trades were partly responsible for the stock market crash of 1929.

What’s the Present Situation?

The following chart prepared by “Dishort.com/Advisor Perspectives” illustrated what is the present situation of Margin Trade in the US market.

From the chart, one can clearly see that the margin debts peaked and then fell in the last 2 market crashes in 2000 and in 2008. The 2000 crash occurs when the margin debts reached about 170% while S&P climbed 75% from 1997. There is a 100% point difference between the margin debt and the S&P growth. As for the 2008 crash, this point difference is about 150%. Presently, this point difference is getting even larger at about 175% as of July 2018. There is no definite proof that a market crash is imminent but at this level, the risk of a market crash would be high.

How Bad will be the present Market Crash?

It is anybody’s guess. Many have speculated for a crash to happen in mid-2015 when Margin Debt was as high as 250%. But this crash did not happen and stock markets continue to ride higher after Trump was elected and promised to make “America Great Again”.
The following chart will show the risk of market failure is much higher than those in 2000 and 2008 because the investors have choked up 3 times as much as a credit balance to do margin trades.
(Note that the investor credit in 2008 was among the lowest because there was a liquidity crisis in 2008 where banks almost run of money. Investors must have been using their assets rather than their money to maintain adequate balance in their margin accounts.)

Why Government Did Not Ban Margin Trading?

Most Governments realize the risks of margin trading but could not always control and contain it as it will affect stock market functions. China experienced the worse market crisis in early 2015 when Shanghai Composite plunged about 8% in a single day. Then the Authority was trying to clamp down on margin tradings and risky lending practices used by China’s biggest securities brokerages. The market has not recovered fully even 3 years after.

In Conclusion

In the 2008 stock market crash, 7.0 trillion USD was wiped off. In the 2000 crash, 8 Trillion USD disappeared within weeks. This coming financial crisis could be even larger.

Update: 12 August 2018

Is CFD a form of Margin Trade?

CFD is an abbrev for “Contracts For Difference”. Many treat it as another form of Margin Trading except for the following

1. One will need much less capital outlays because of the very high margin or leverage in the trade. For example, when one takes a normal margin loan, one will need to come up first with about 40% of the capital investment with a 60% loan. For CFD, the capital investment may just be 5%;

2. The risk will be much higher due to the high leverage; one can easily lose 100% of one’s capital;

3. In CFD, there is no ownership of the stocks or the underlying assets. In normal margin trading, one still owns the rights to the stocks such as voting, dividend, corporate action, etc; however, the brokers or the banks are given the right to sell the stock to recover their losses, if any.

Update: 10 December 2021

What is the present position of Margin Trade?

The market is again reaching a testing point after the last market hoax in 2018 where we saw DOW Future losing about 25% or 6,000 points from 28,000 to about 22,000. Then the market was spooked by "heightened trade and geopolitical tensions". There were not many concerns about such a crisis having any impact on inflation and therefore, did not attract any monetary policy response.

If a market crash were to happen in 2021 as expected after much speculation, it could be a different picture altogether. First, the market has had no appreciable or reasonable market correction in the last 10 years between 2009-2019; instead, we saw the market's rising rate double from 5% per month to 10% per month in the short span of 21 months between 2020 and 2021.

Rightly speaking, the market could have continued its way up at the pace if the inflation can remain as mute as before but the last inflation rate of 6.8% has prompted market speculation that Fed is going to increase the interest rate soon to tame the inflation. This will not be good news to those investors who have been "living" in the past using margin trades to earn a living. The margin trade business has gone sky-high with a rising rate about the same as the stock market for the period in the last 2 years. We should see the margin traders will start to sell their stocks as they will no longer be able to hold the increasing margin rate with the market price falling every day when there is a market crash.

What caused the Present Inflation and Why the concern?

Many speculated that the monetary easing especially the recent one has caused this present inflation rate to rise. They are not wrong as can be seen from the following M2 money supply chart. The chart is showing us clearly that the growth of the M2 was gradually rising over the past many years except for the last 2 years when we can see a sudden jump. This signifies that there was an injection of cash or equivalent causing market inflation to rise. This is because the M2 money supply is measuring the money that mostly flows within the community; for example, cash, and checking deposits and is easily convertible near money.

Inflation will always attract Fed to take action in the past. They would either raise interest rates or tighten monetary policy which would affect not only the stock market but also the rich people.

Update : 13, 15 & 17 December 2021

When will Fed Tighten its Monetary Policy?

Fed has been using monetary policy in the past to fight inflation. This is because reducing the amount of money in circulation will curb consumer spending, and that will, in turn, lower the rate of inflation. The question is when?

The speculation in the market is for Fed to raise Federal rates before September 2020. Wells Fargo expected 2 rate increases in 2022 and another 3 in 2023. That was a few weeks back.

Presently, Global Central Banks are divided on when to have the interest rate increase in their countries but Fed Chair, Jerome Powell, has been expected to confirm soon whether or when the US will withdraw from the stimulus and if the interest rate should be raised sooner than expected in 2022.

Update 15 December 2021

Fed signalled that it would have 3 interest rate hikes in 2022 and would withdraw stimulus as early as March. It is more or less in line with the market expectation.

Update: 17 December 2021

BOE's unexpected hike of interest rate to 0.25% from 0.1% could send shock waves in the stock market around the Globe, especially when most stock markets today are propped up by borrowed money such as Margins, etc

Update: 20 December 2021

The following is a chart showing the Margin Balances collected by FINRA for the various months since 1997. The chart is showing the long-term trend lines of Margin Balances and the US long-term interest rate are moving inversely over the period; however, one cannot say so for the short-term movement. This may be because some investors were seeing opportunities, for example, to borrow more money to buy stocks when others were dumping the stocks. It may be also because the investors did not feel the pain as the interest rates were rising in small steps of 0.25 percentage points each time.

Update: 18 July 2022 The Possible Next Market Move

The following charts will show that the Margin Debts in the US market have dropped to a level that could have triggered the urge to restart the engine for the US market.

One will easily notice that the curve of margin debts tended to run below and follow behind the trend of the S&P500 until the year 2005/06 for some reason probably due to a change in the SEC rules. Since then, margin debts have always been running and leading the S&P500.

It is interesting to observe the following:-

Figure 5

a) Margin debt is always a leading indicator for market crashes; it will fall before the market index started to fall;

b) Except for the Dot.com bubble in 2000 and before the SEC rules were changed, the margin debt will rise first, followed by the market and also when margin debts almost reach and touch the S&P500;

Figure 6:

1) The chart shows that margin debt is no longer the main source of the "driving force" behind the market. The investors could have found and used other sources to drive up the market, especially when such changes occurred after the latest round of QE which is also driving up US inflation at the same time;

2) Nonetheless, the curve of margin debt as % S&P has just hit support again. It might have indicated that the market could have recovered provided there is no further aftermath event like Lehman Brothers in 2008 causing secondary damages to the stock market and Fed is able to control its monetary policies to avoid a hard landing.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

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Other stock articles

Tinyurl : https://tinyurl.com/y9lqscqh

Why Medical Insurance not needed for Hong Kong Residents?

noreply@blogger.com (Sky Juice) — Wed, 06 Jul 2022 14:35:00 +0000

6 July 2022

There was a discussion about why every Singaporean has to pay an annual insurance premiums for Medishield Life for the hospital stay and basic medical treatment in public hospitals. On the other hand, Hong Kong residents need only to pay for the essential hospital stay.

These insurance premiums could add up to more than SGD 1,500 per year for each Singaporean.

Why the Differences?

There is a Chinese saying about "the wool always comes from the sheep".

The difference is on whether the free medical treatment services offered by the Government hospital have been prepaid by the taxpayers.

In this case, the Hong Kong government could have already collected a fee from the Taxpayer and therefore, there is no need for the Hong Kong resident to pay for the service again.

Example?

A good way to find if the above statement is true is to examine and compare the personal income tax structure between Hong Kong and Singapore as shown in the following example.

According to statistics, the average salary of a working person in Hong Kong is around HKD 440,000 per year or HKD37,000 per month. For the workings of this example. let's assume that the average salary of a working person in Singapore is the same i.e around SGD 79,000 using a conversion rate of 1 SGD to 5.58 HKD.

If we work out the personal income tax that a Hong Kong and a Singapore worker have to pay, we will have the following situation:-

The above working shows that a Hong Kong worker has to pay 13.4% of his annual salary whereas a Singapore worker has to pay only 4.15%. In other words, a Hong Kong worker will have to pay SGD 7,078 more than a Singaporean worker. This SGD 7,078 should be more than enough to cover not only the insurance premium of the medical treatment but also many other Hong Kong government's essential free services.

Therefore, we can conclude that the free medical treatment provided to Hong Kong's residents must have been prepaid by the taxpayer.

References:

1. MediShield Life premiums and subsidies in Singapore

2. Public Hospitals in Hong Kong: How Much Does It Cost?

3. Income Tax in Hong Kong

4. Income Tax in Singapore

Why China Does Not have the 5-7 nm Chip Manufacturing Plants?

noreply@blogger.com (Sky Juice) — Tue, 05 Jul 2022 09:34:00 +0000

5 July 2022

There were plenty of speculations about some Chinese manufacturers such as BYD, Huawei etc have successfully produced 7nm microprocessors for their products when the US slammed sanctions against selling such devices to the Chinese companies. This article will try to explain what has happened and why there is always such a claim.

Chip Design & Production

Chips are usually designed and produced in 2 different processes. First, the company that wants to manufacture the chip will design the chip using special design software like those licensed under ARM of the UK. After having designed and tested the logic, circuitries and various working components of the chip, a file will be created for the chip manufacturing plant (Fabrication Plant) to etch and produce the chips for the company. Here is a short video about how chips are designed and produced.

Why No 5-7 nm Chip Manufacturing Plants in China?

This question must have been asked all the time. China has been seen to pay lot of attention and has been known to provide funds for the research & development of chip manufacturing. To date, there just isn't much progress although there were lots of media speculation about China having acquired the technology to produce the 1.0 nm chip.

The following could be the reasons requiring further confirmation:

a) China might have the chip design capability and other supporting facilities such as a clean room etc but might not have the sophisticated equipment for the production of the 5-7 nm chips; one of such equipment is the lithographic printing machine for the printing of the chip design onto the photosensitive silicon wafer. The US company, ASML is presently the only supplier of such machines in the World.

b) Today, many companies are quite aware and have been taking steps to prevent their new technology from being "duplicated or stolen"; therefore, the foreign chip manufacturers and companies have moved only older chip manufacturing technologies to countries like China;

c) China today have no existing 5-7 nm wafer fabrication plants where they can take reference to learn quickly to set up these plants. So, it is expected that China would have to take a longer time to acquire and build up such technology from scratch. The "road" ahead would be difficult for China especially when many countries that have the required technology are not friends of China.

How to Tell Which Country is Economically Stronger ?

noreply@blogger.com (Sky Juice) — Tue, 05 Jul 2022 01:02:00 +0000

4 July 2022

People always like to compare country by country, especially when those countries are their favorites. Some compare them in terms of military strength; some, in terms of wealth, and others, in terms of economic strength. Many a time, the argument always ended up souring the relationship among the friends and relatives and sometimes, among the family members.

This article will suggest a more rational approach to comparing the economic strength and market condition of various countries.

How?

By comparing the 5 Years Credit Default Swaps (CDS) of the countries. If a country's CDS value is higher than the other, it is likely the country is economically weaker than the other country.

Why?

CDS is a financial derivative that bond buyers will usually buy to offset the credit risk of buying a large quantity of bonds. Buying CDS is like buying an "insurance policy". The buyers will pay a premium that will ensure that the buyers would be reimbursed in case there is a bond default. If the bond buyer is borrowing money from the banks to buy the bonds, the banks might have a condition for the borrower to buy CDS before the banks give out the loan.

Who sets the CDS Value?

A derivative is simply a financial contract between two parties, in this case, the buyer and the "insurer" for the swap of the credit risk of purchasing the bonds. Credit default swaps are traded over-the-counter (OTC). Their trading methods are non-standardized and the prices or values are not verified by an exchange. The "World Government Bonds" webpage keeps track of some of the countries' CDS values as shown attached.

(Doubleclick to go to the Webpage)

How to interpret it?

The table has the following interpretations. It shows not only the country credit ratings, the 5-year CDS but also the % changes in the last 1 month and 6 months. The important figure is the Probability of Default (PD) which is worked out based on a 40% recovery rate.

Other Information

If one were to click the country in the table, one will be shown the following page which gives not only the details but also a comprehensive chart showing how the CDS values moved in the last 2 years. In the case of Russia, one can see that the CDS value has risen from a low of near-zero to 12,500 in less than 6 months.

What is CDS Value?

The webpage did not explain clearly what is the CDS value and how one can work out the premium to be paid for buying the CDS,

It is very likely that the CDS value is actually the CDS price. It is is quoted in terms of credit spreads which is the implied number of basis points (bps) that the bond buyers will have to pay for protection against a bond default.

For example, the 5-year CDS value for a US Government bond is 18.2 as quoted in the earlier table. Assume Company X has decided to buy USD 10 million US Bonds and also a credit default swap contract for the duration of the Bonds' life from a bank called New National Bank. Company X will pay 18.2 bps of the face value to the bank. In return, the bank will offer insurance against any bond default.

Conclusion

The information provided in the table could be used to work out the premium for the CDS of buying Government bonds. The table could be used also to compare the current economy and market conditions between countries.

Lastest 5-Year CDS Quotation

Please refer to this World Government Bond Website.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

The Nanjing Bank Incident - The Resign of the Bank's CEO

noreply@blogger.com (Sky Juice) — Sun, 03 Jul 2022 12:56:00 +0000

2 July 2022

On another day, another banking incident happened in China. This time, it involves a larger bank, the Nanjing Bank in Nanjing, Jiangsu Province. It is about a few hundred Km east of Shanghai.

What happened?

The bank's CEO, Mr Lín jìngrán (林静然) suddenly submitted his resignation on 29 June 2022.

The stock market and the public had taken this as a surprise. The news caused the "circuit breaker" of the Nanjing Bank counter to trip when the bank's stock price plunged over 10% in value. The stock price eased to end the day with a 6% loss after the bank came out to clarify that the CEO resigned on his accord after ending his 2-year term as a CEO and after he had found a new job.

Anything Wrong?

It is nothing but common to read about CEOs resigning from banks. This is especially so when the banks will usually warn the market beforehand, giving where about the CEO would go in the next job.

What happening in Nanjing Bank came as a surprise because

1) The resignation of the CEO came without any pre-warning; then

2) The was a change in the Company's stamp (印章); plus

3) The Provincial Government step up its effort to control banking failures.

The banking analysts were quick in defending the Nanjing bank's financial position, giving the following analysed results to calm the stock market and the public. The local authorities were even faster in coming out with warnings about public misinformation, requesting the public not to spread the misinformation.

The Banking Financial Position

The Nanjing Bank's position is nothing but spectacular as one might find from its financial reports as shown on this web page

(doubleclick picture to go to the website)

The most important thing is the bank has adequate funds with an asset ratio of 13.54 to cover any bad debts. It has also a non-performing loan (NPL) ratio of 0.91. This NPL ratio of 0.91 is much much better than many other banks for example those in Hong Kong and in Singapore.

(doubleclick picture to go to the website -see page 17)

What could go wrong?

The following could go wrong as stated on page 53 of the bank's financial report in 2021. The bank has a credit commitment of 393 Brillion Yuan or 58 Billion USD. This figure is about 22% of the bank's total assets or about 10x the bank's operating revenue in 2021. These 393 Billion are the off-balance-sheet amounts which could become a problem if they are converted to debts in the future time.

What if?

Presently, the bank has a positive balance sheet as shown with the total assets standing at 1.7 Trillion Yuan and the total debts around 1.6 Trillion. If the committed fund were converted to debts, the bank would be considered bankrupt.

Conclusion

On the surface, Nanjing Bank has a healthy balance sheet if the credit committed funds are always excluded from the balance sheet.

Update 3 July 2022

A blogger explains the same in a much more detailed manner but in Chinese

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

Would Investors Ditch the US Bond Market?

noreply@blogger.com (Sky Juice) — Thu, 23 Jun 2022 03:14:00 +0000

22 June 2022

The US Government bond yields have been rising over the last 6 months. The situation is getting worst; much worse than China's bond yield as shown in this attached chart. Is that a cause of concern or would traders ditch the US bond market for other markets?

Why the Concern?

Government Bonds are often seen as a safe-haven investment in the investing world. They play an important role because they will bring income, stability and diversification. But when there is a rising yield, the investors become worried because they will get less if they sell their bonds.

Why does the US's Yield Curve look that bad Today?

6 months ago, US's yield curve looked pretty good. It was much better & healthier than the Chinese yield curve. But that has been changed about a month ago when Fed announced that it would raise the Fed fund rate aggressively to curb inflation. This announcement and subsequent action by Fed in the following months have dampened the investors' sentiment. The investors are also worried about long-term growth caused by the rising Fed fund rate and the Quantitative Tightening (QT).

China has so far kept their bank lending rate steady. On some occasions, they even cut the bank lending rate to stimulate the troubled housing sectors.

How do bond yields impact the stock market?

Investors will always compare the returns and the risk premium when they buy any investment product, be it stocks or bonds or other financial instruments. When valuing equities, investors will add the equity risk premium and compare that to the rate of return from bond yields for example. If the bonds have better returns, they will dump equities and buy bond yields and vice versa.

Would Investors Ditch US Bond Market?

Some investors began to worry about the US Bond market when the bond yields turned bad recently. Some expected the investors will ditch the US bond market and prefer to buy other bond markets such as the Chinese bond market because the Chinese bond yields looked much better. Would this happen in the near future and why?

The answer is not definite; it would depend much on how much an investor needs to fork out to buy a Credit Default Swap (CDS) from the Derivative Market.

What is a Credit Default Swap (CDS)?

CDS is a financial derivative that the bond buyers will usually buy to offset the credit risk. Buying CDS is like buying an "insurance policy". The buyers will pay a premium. This is to ensure that they would be reimbursed in case there is a bond default. If the bond buyer is borrowing the money from the banks to buy the bonds, the banks might have a condition for the borrower to buy CDS before the banks give out the loan.

What are the CDS Rates Today?

CDS rates or premiums will be different for different Governments or Corporate bonds.

One can make reference to this quick list on this webpage for the latest quote on CDS rates for the Government bonds.

The following picture shows the 5-year CDS value for the US Government bond is 16.6 on 22 July 2022 and for China, it is 78.59. China has a higher CDS value because it has a higher probability of default at 1.31% based on a 40% recovery rate.

The quoted CDS value would be used to work out the premium to be paid by the CDS buyers. The higher the value will mean the higher the premium.

Therefore, it does not mean buying the Chinese Government bonds will be more cost-effective than buying the US Government Bond because the US yields are rising.

Reference:

The 5-year Sovereign CDS rate for Various Countries

Useful StockTrading Patterns Occurring Recently

noreply@blogger.com (Sky Juice) — Fri, 10 Jun 2022 02:57:00 +0000

22 February 2022

Jump to

1) Bear Flag in DOW (22 February 2022)
Update: 25 February 2022
Update: 1 May 2022
2) Top Island Reversal (Singapore Airline)

3) Symmetrical Triangles (HSI, SSEC, Crude Oil)

Update: 9 March 2022

Update 23 April 2022

4) Head and shoulder pattern

Update 26 April 2022 (SSEC)
Update 10 May 2022 (DOW)
Update 24 May 2022 (DOW)

Update 12 June 2022 (DOW)

5) Candlestick Gap Covering

Update 23 June 2022 (DOW-Deciding Direction)

Update 27 June 2022 (Covering gaps)

Update 28 June 2022 (Failure to Cover Gaps)

Update 30 June 2022 (Covering Gaps Successfully)

Update 07 July 2022 (Possibility to cover leftover gap)

Update 11 July 2022 (covering leftover gap)

Update 21 July 2022 (covering leftover gap)

Update 28 July 2022 (covered leftover gap)

Update 1 August 2022 (covered leftover gap)

6) Support and Resistance

Update 16 July 2022 (SIA Support and Resistance)

Update 6 August 2022 (S&P 500 Resistance)
7) The Cup & Handle Patterns

# Bear flag; trading pattern, how to trade, market rise, fall

There are lots of articles written about this topic. Most of them are just descriptive although some come with graphs and charts. There are quite difficult for laymen to understand. This article will intend to make this learning as simple as possible. It will use animated charts where possible to illustrate; at the same, it will chart the stock direction using the present market prices.

Common Trading Patterns

These are the common trading patterns often found in our daily market trading. Able to identify them as we see them in the chart will help us win in stock tradings.

1) Bear Flag in DOW (22 February 2022)

The first pattern that appears today is a bear flag as shown.

This chart pattern appears frequently whenever there are serious corrections where the market falls more than 5% from its peaks. In the recent market correction, DOW fell by about 6% from its all-time peak of about 37,000. It then recovered about 3% just to see another fall of 4% to the present position of 33,500. This time, it made a "bear flag pattern" as shown above.

How Easy to Spot & How to Trade?

The bear flag pattern is easy to spot and trade. One could usually tell where the price will go and what will be the target price. In this case, the first target price is around 32,000 as shown in the following animated chart

How will it go down?

Stock will not fall in a straight line unless there is sudden bad news spreading such as the sudden and unexpected failure of a financial institution or the breakout of war; otherwise, the market will always want to test and challenge the price falls. When this happens, the stock price will want to test whether it will climb back & cross the lower trendline of the flag as shown red in the following chart:

Recently, we have had the Ukraine crisis that sparked the market price correction. But this war between Russia and Ukraine has not developed into war yet. There is a pretty good chance that the market will want to test and challenge the price falls.

Update: 25 February 2022

As expected, the market fell last night to touch the target price of about 32,300 last night briefly. However, Ukraine and other crises are still very real out there. It is expected that the market will revisit the lows again.

Update: 1 May 2022

DOW formed another bear flag in March. It could have recovered if it could stay above the red trend line as shown in the chart below. It struggled and made several attempts but failed so far which made it more vulnerable. One would expect DOW to break its support @ 32,600 soon to make another new low.

2) Top Island Reversal

A top island reversal pattern was spotted for Singapore Airlines. It is a blue-chip company in Singapore Stock Exchange (SGX). The pattern has shown up in the daily chart as well as in the 4-hour chart as shown below.

How To Identify?

It can be identified by the island it has formed. Usually, when the price gaps up, there is always a rise in the trading volume, though in this case, the rise is not significant as shown in the following chart.

What to look for?

For those who are looking to short Singapore Airlines, it is the best time to do so when the price breakaway from the island. One should place a stopgap price at the breakaway point of the last candlestick.

For those who are looking for an opportunity to enter the market again, one will have to look for a bottom reversal pattern. This is usually shown up in either an exhaustion candlestick (as shown above) or an exhaustion gap candlestick with a significant increase in volume. It can be also in any other reversal pattern.

Update: 9 March 2022

SIA failed to keep its momentum because the Ukraine war spiked oil price hikes recently. Oil prices went up by 35% in a short span of about 2 weeks. It could cost aero fuel to go up in price. The SIA stock price fell immediately until it hit another exhaustion candlestick yesterday. If there is no further hike in fuel oil pricing, SIA might recover from here. Whether it will "leap & bound" to a much higher level will depend on the future oil prices.

3) Symmetrical Triangles

The Symmetrical Triangle is an interesting pattern that is often seen in stock trading. One can easily draw such a pattern by linking the peaks with a trendline and the troughs with another trendline. The following picture shows 3 types of Triangle patterns: the Symmetrical, the Descending and the Ascending Triangles

A symmetrical triangle pattern can be found in many different time intervals. But it is most pronounced in the monthly interval for some reasons.

Examples?

A symmetrical triangle pattern was presently found in the following exchanges

1. Hang Seng Index (HSI)

2. Shanghai (SSEC)

3. Crude Oil WTI Futures

What to Expect?

One would expect the price of the stock or index to break away from the triangle. This will occur whenever the price break-away from the lower or upper trendlines that have been trapping the stock/index prices as shown in the above examples.

What are the Target Price to expect?

For the bottom break-away in the case of HSI, one could often expect the target prices to be determined by projecting the price differences between the peaks and the lower trendline as shown in the following example. In this case, the 1st target price is 18,500 and the second target price is 12,500 if the first target price cannot hold the falling price.

The above example can also be used for the top break-away symmetrical triangle patterns or other similar kinds of patterns. Usually, when there is a break-way from the triangles, there should be an increase in trading volume.

Update 23 April 2022

HSI briefly hit the 18,500 on 15 March 2020 but rebounded on the second day to hit 22,500 on 4 April 2020. Nevertheless, it failed to recover and crept back to the symmetrical triangle. Therefore, one would expect HSI to revisit the 18,500 again. If that level cannot hold the fall, very likely HSI would want to test the next support level which is 12,500.

4) Head and shoulder pattern

Head and shoulder is another interesting pattern that is often found in stock and indexes during the bear market or when the stock or market price has been “pushed” artificially above the unsustainable price limit.

Characteristic

The pattern consists of left and right shoulders, a head & a neckline. A typical pattern is shown as follows. The neckline need not always be in the horizontal position. The neckline often appears as a rising trend line

Example?

This Head and Shoulder Pattern was recently found in the Shanghai Composite Index as shown. Ir could be found also other China markets like the Shenzhen Index although the pattern could be slightly different.

What to expect?

One would expect the stock or market price to pick up steam in the beginning with market players all rushing in to take a position, waiting for the price to rise. As soon as the price has been “pushed” to the peak, the market players will expect a correction to follow. They would stop buying. However, when they see the market isn’t correcting as much as they have expected, they started the buying spree again. This buying will push the price to form the right shoulder By now, most of the market players remain a "waiting and see" attitude and would start selling if there is unfavourable news emerging. If there are lots of them dumping, the market volume will increase; if not, the market will retest the low and challenge the broken neckline as shown in the case of the Shanghai chart.

What is the Target Price?

In the case of head and shoulder patterns, the target price is usually projected from the neckline's break-point as shown in the above picture. That line used for projection is drawn connecting the highest peak in the "head portion" to the neck-line as shown. In this case, the target price is around 3,050.

Update 26 April 2022

As expected, Shanghai Composite Index (SSEC) broke the support @ 3.050. This support was broken in one single day on 25 April 2022 when SSEC shredded about 5.1% to end the day @ 2,928. Because SSEC broke another Head and shoulder line on its way down as shown in the attached chart below, it is expected that SSEC will not recover from the fall until it has tested the next support @ 2,650. And if that support cannot hold the fall, one would expect SSEC to fall further to test the other support @ 2,500.

Update 10 May 2022

Earlier when DOW formed a bear flag, we expected DOW to test 32,360 as shown here. Since then, DOW recovered but it made a dead cat bounce to come back and test this support again last night. Except this time, it has broken the 32,360 support with a fresh Head and Shoulder pattern as shown attached, it is likely therefore for DOW to test the support of 31,250 (marked 2), failing which, it will test 30,250 (marked 3) & might go down further to test other supports.

Dow made more head and shoulder (H&S) pattern as it went down. It has test 31,250 recently and retraced back as shown. It is now testing the H&S pattern. If it fails to overcome the resistance at the H&S, it will want to sink again to test 30,250 or the other lower supports.

Update 12 June 2022

On its way down, DOW made another H&S pattern as shown. This pattern appears to be quite reliable as its H&S resistance has been tested & challenged before going down.

The next target is likely to be below 30,000 as indicated\

5) Candlestick Gap Covering

Candlestick gaps are often created when there are announcements of special trading news that might affect the stock prices; for example, the recent news about the US's inflation hit 8.6%, causing the market to create a candlestick gap last Friday, 10 June 2022. Another candlestick gap was created the next trading day on Monday, 13 June 2022 as there were fears about markets falling into the Bear territory.

There are about 4 types of gaps found in trading charts; namely, the breakaway gap, the exhaustion gap, the common gaps and lastly, the continuation gap as described in this webpage.

As the recent two candlestick gaps are caused by fears, they might be covered up soon when the fears go away or the events are overtaken by other events.

Update 23 June 2022 - Deciding Direction

DOW made advances after hitting the support @29,800 as shown in the attached chart. DOW is now stuck between covering the candlestick gaps and the testing of the next target @ 28,700 support. This target of 28,700 was set earlier by the red H&S line. The decision on which direction DOW would move will probably depend on how the US economy will be doing in the next 2 weeks.

Update 27 June 2022 - Covering Gaps

DOW has decided to cover up the gaps. The first gap ("gap 1") was covered on 24 June as shown. Then there were reports about corn, Wheat and Soy Bean prices dipping about 20%. At the same time, oil prices and prices of other commodities were seen dropping. It is like the economy has suddenly turned better.

In view of the above, it is likely that DOW would want to continue going ahead to cover the other gaps ("gap 2"). It would also try to break the declining trendline; failing which, it would back down to cover the "gap 3" as shown.

Update 28 June 2022 - Failure to cover Gaps

DOW jumped over 1% yesterday when it opened at 9:30 am. it was all ready to cover gap2 until the news about the bad CB Consumer Sentiment index came out at 10:00 am.

That piece of bad news sent DOW tumbling down over 700 points. DOW ended with an index of 30,950 or a loss of about 500 points for the day.

DOW has yet to decide where to go next as it left Gap 3 uncovered. It is very likely that DOW would cover Gap 3 next.

Lesson: Candlestick gap covering will depend much on stock market news. This is especially true when there are counter-directional gaps to be covered at the same time.

Update 30 June 2022 - Covering Gap Successfully

DOW managed to cover gap 3 successfully today. In doing so, it almost created another candlestick gap on the way. But it managed to cover the gap nicely with a neutral bullish candlestick before the closing time.

Going forward, the covering of gap 2 will depend on how the economy will perform. But it would appear unlikely for the gap 2 to be covered soon without DOW having to create another new bottom. This is because the economy is NOT expected to look any better with the Ukraine war still going on and the Fed isn't ready to remove the QT & the rate hikes.

Update 7 June 2022 - Possibility of Covering Leftover Gap

The strength of US stock suggested that it might have decided to go and cover the leftover gap as shown before the FOMC meeting on 27 July. This is provided with the economic news in favour of such a move. The job report tomorrow will likely tell if this is a possibility.

Update 11 July 2022 - Covering Leftover Gap

Dow struggled to cover the leftover gap last week. It might be waiting for the coming CPI number to be reported at 8:30 am EST on Wednesday, 13 July.

The following shows 2 charts: The job report/CPI numbers and the DOW chart with the CPI release date marked.

One can see from the above 2 charts that the US stock market is very sensitive to job reports and CPI numbers in recent months.

For the past 6 months, The job plus CPI reports caused DOW to drop more than 5% on 4 occasions. The 2 months in March and May that DOW did not react was because DOW had already responded to other bad economic figures like ADP Non-Farm Employment Change or Fed's rate hikes.

However, it is expected that Wednesday's CPI report on 13 July might not cause a big stir in the US markets for the following reasons:-

1. As June's CPI report has just resulted in DOW dropping more than 8% without proper recovery, it is anticipated that DOW could have already priced in July's CPI number;

2. The commodity prices that caused inflation just started to fall in July. The CPI report on 13 July is actually for June. The market is likely to ignore this 13 July report until next month.

On the other hand, if the July CPI report is better than expected, it will proceed to cover up the leftover gap.

Update 21 July 2022 - Covering Leftover Gap

US market has been taking its time to decide its next move but the general direction appears to be going up to cover the leftover gap.

This decision could be seen from the attached business cycle chart between SP500, US Dollars, Commodity and the US Bonds.

In the past business cycles, the stock prices tend to rise after the fall of Commodity and the rise in US Bond markets.

Presently, Commodity prices have dropped more than 20% since the last rate hike on 15 June 2022. At the same time, we see US Bond prices start to rise. This business cycle tends to support the move to expect the Fed to keep the rate hike within the expectation of 75 bps, bringing the Fed Fund rate to 2.5% by next Wednesday, July 27, 2022.

Therefore, it is likely that the market will make an attempt to cover the leftover gap before deciding to make its next move.

Update 28 July 2022 - Covered Leftover Gap

DOW finally covered the leftover gap (shaded red in the attached chart) today after Fed hiked 75 bps in the Fed Fund rate. It is likely that it will head up to test the nearest support @ 32,600, failing which, it will make an attempt to cover gap 1 created recently.

Note that there is also an existing gap created on November 9, 2020. This is a run-away gap after drugmakers Pfizer and BioNTech announced that they had come up with a coronavirus vaccine that was 90% effective. DOW might want to challenge and cover this gap if the support @ 29,700 were to fail for some reason.

Update 1 August 2022 - Covered Leftover Gap

DOW managed to break the resistance @ around 32,600 last Friday amid the big stock like Apple and Amazon presented better forecasts ahead and also, it was the last trading day in the mid-summer. Traditionally, the market is expected to take a fall in the coming Monday after a rise last Friday.

The DOW's RSI indicator is suggesting that DOW might just want to test the next resistance @ 33,300 and then fall back down to test the immediate support @ 31,600 before going down further to cover up the leftover gap @ around 30,800.

after note: 6 August 2022: The reluctant of DOW jumping up and starting a rally yesterday with very good US Job Report suggested that DOW might want to head towards 30.800 to cover the gap created a few weeks ago.

6) Support and Resistance

Support and resistance are often used by traders to buy and sell a stock. The following chart shows all the support and resistance in red presently found in the daily chart of Shanghai Composite (SSE).

The support and resistance are usually all in one line. This is because the support can turn into resistance and vice versa.

There are 10 events shown in the following chart:

Event 1: shows the support has just been broken;

Event 2: now become the next support; but unfortunately, it was broken too 2 days after;

Events 3 & 4: is the next support; in this event, traders sent SSE up to test the support created by event 2; but, the effort failed;

Events 5,6,7 & 8: becomes the next support; this time, it successfully broke the resistance for the first time and sent SSE up to test the support created in event 1;

Event 9: shows the testing failed; as a result, traders sent SSE down to test the next support @ Event 10;

Unfortunately, SSE broke the support on 15 July because China reported a very poor 2nd quarter GDP growth of 0.4%, it will be testing the next support @ 3, 050.

Traders could earn more if they could also combine the use of this support and resistance chart with patterns described in this webpage

Update 16 July 2022 - SIA Support & Resistance

SIA has a similar story on support and resistance as the Shanghai Composite described above except the SIA has more Support/resistance lines as shown in this attached chart.

Presently, SIA has just crossed the resistance at 5.21 marked as event 8. SIA had almost lost this "resistance turned support" on 14 July but regain it on Friday when this news about SIA having better performance was known. The next resistance for SIA is 5.36.

Update 6 August 2022 - S&P500 Support

The US markets were reluctant to move forward despite the fantastic Job Report figures on Friday, August 5, 2022. The Non-Farm Employment Change was 528,000. This figure was more than twice the expected figure of 250,000. However, the US markets were not excited. S&P 500 stayed below the resistance of 4,170. This suggested that S&P 500 might want to go down and test gap 1 @ 3,800 created on July, 15.

7) Cup and Shoulder Pattern

There are 2 types of Cup & Handle patterns commonly found in stock trading, namely

a) The normal Cup & Handle is found when the stock price hit the bottom;

b) The inverse Cup & Handle is found when the stock price is at the top.

These are reliable continuous trending patterns.

How to Identify Properly

By length of time: The cup shape should be longer than 6 weeks and the longer the better. The longer the time, the stronger the signal; void cups with sharp "V" tops or bottoms;

Depth: Ideally, the cup should not be overly deep. Avoid also handles that are overly long and big. Also, the handles should form either at the top half of the normal cup pattern or the bottom half of the inverted cup pattern.

Volume: Volume should decrease as the handle is formed. The prices should remain lower than average during this formation period until stock prices begin to make their move up or down again. The volume should "jump' during and after the breakout.

Target Prices

Examples

A good example is to use the S&P500 history chart of 2007/08 where many traders today were saying that the present US stock market is mimicking.

At that time, the market happened to show 2 cup handles, handle 1 and handle 2 as marked in this chart.

Handle 1 was a false handle move because the trading volume did not "jump". The market could have recovered after Handle 1 was formed if not because of the "Lehman Brothers event" that occurred during the formation of Handle 2.

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

Tesla To Stop Recruitment and Cut Staff Numbers

noreply@blogger.com (Sky Juice) — Sat, 04 Jun 2022 02:07:00 +0000

3 June 2022

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Tesla's CEO said on 2 June that Tesla would stop the recruitment and cut staff by 10% globally. The given reason is that the CEO was having a "bad feeling about the economy"

Whose is Tesla?

Tesla is an American automotive and clean energy company that designs and manufactures electric vehicles (electric cars and trucks), battery energy storage from home to grid-scale, solar panels and solar roof tiles, and related products and services. It has a market capitalization of more than US$600 billion.

Tesla has electric vehicle plants in the United States, China and Berlin. They employ around 99,290 staff worldwide, so cutting 10 per cent of staff could equate to losses approaching 10,000 people.

The Market Response

The market was taken by surprise, especially after Tesla's stock price has lost by about 80% from its peak in 2021 and has just managed to recover 22% recently.

The CEO's announcement about staff cuts sent the "chills", causing Tesla's stock price to fall by 9% last night.

The announcement also threw "a spanner" into the recovering US stock market, sending Nasdaq Index to fall about 2.5% overnight.

Many marker players were puzzling why Tesla has taken this approach and questioned if the approach was right to restore normalcy after two chaotic years of the pandemic. Some hardcore players argued that the approach was necessary as many factories have now been fully automated.

To get the correct answer, let's find out how Tesla was doing in the sale for the past year.

The Sale

Tesla's new vehicle sales and market share in the US (in unit) are shown in the following charts:

The 1st chart shows that Tesla's sales grew by more than 60% from 2015 to 2018. The growth slowed down to 30% just before the pandemic in 2020 and about 3% in 2021. The second chart shows that Tesla's market share was about 75% when it produced about 300 cars in 2018. This market share shrank to 40% in 2019 and about 3% in 2021.

In Conclusion

One can readily be seen that Tesla's sale has been affected not only by the pandemic but also by other factors such as competition etc, reducing their market shares.

Reference:

1. Tesla Inc US Total Sale

https://www.goodcarbadcar.net/tesla-inc-us-sales-figures/

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

The Rate Hike and Quantitative Tightening

noreply@blogger.com (Sky Juice) — Mon, 23 May 2022 03:14:00 +0000

20 May 2022

Jump to

1) Why QT Now & Not Later
2) Rate Hikes & the Market in the 1970s
3) How Market Responded to QT (1 July 2022)
4) Update: Market Responded to QT (26 July 2022)
5) Update: Market Recovered? (26 July 2022)

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The US stock market is very sensitive to the news and announcements about U.S. Federal Reserve (Fed)'s monetary policies, be it Fed Fund rate hikes or cuts or quantitative easing (QE) or tightening (QT). The stock market price will go up when there are rate cuts or QEs and vice versa.

This time around, Fed announced it will increase the Fed Fund rate hikes 6 or 7 times until the inflation is tamed. It will also carry out the QT at an increasing pace. Fed had carried out similar rate hikes and QT also in 2015 except this time around, the global economy is not looking as good.

This article will try to discuss how this round of monetary policies will affect the US as well as the stock market.

What happened?

Prior to 2020, the stock markets had their glorious days. These all came to an end when Covid broke up the pace in early 2020. The US has the highest Covid infection rate and many people died. The global economy took a tumble with many countries having negative GDP growth in the 1st quarter of 2020.

On March 15, 2020, the US Government took the initiative to pump over USD$700 billion into the US monetary system to rescue the economy. Later in the year, it made available USD2.3 Trillion for the lending program and expand the QE program with USD3.4 Trillion money for an unlimited period.

This 3.4 Trillion stimulus package of 2020 set the stock market on a rally; unfortunately, it also caused the US's inflation rate to rise quickly from an average of about 2.5% in 2020 to the present 8.5% in 2022.

To curb the rising inflation, Fed announced in September 2021 that it would raise the Fed Fund rate 6 or 7 times in a controlled manner. At about the same time, Fed also announced that it would reduce the QEs/ In May 2022, the Fed came up with a QT plan indicating that it would reduce the size of its balance sheet by up to USD$ 95 billion per month until further notice.

The following is the table showing the detail of the rate hikes and QE/QT plans carried out or to be carried out in 2020/22.

How the Stock Market Reacted?

These Fed's rate hikes and QT plans put the "nails" on the US stock market's "coffin", sending the US stock market tumbling an average of more than 15% to date as shown in the following chart.

Why was the US's Inflation rate Rising?

It is known that printing money indiscriminately for citizens to spend will cause the inflation rate to rise. For years since 2008, the US Fed has been said to "Print" a lot of money under its QE programs but these QEs are for lending programs and they have never caused the US inflation rate to rise. The last QE of USD3.4 Trillion in 2020 was given out for the US people to spend to tie over the Covid pandemic. This last QE raised the US's inflation rate from an average of 2.5 in 2020 to about 8.5% in 2022 as shown in the following chart.

How Stock Market Reacted to Rate Hikes?

It was the conventional belief that Fed rate hikes will increase business capital costs and will affect the economy and slump the stock market. However, this was never the case in the past years when the borrowing cost was low & the economy was growing as shown in this chart.

Later, on 3 November 2021, Fed announced that it would taper and cut the size of its balance sheet through QT, This announcement set the stock market tumbling.

Why the Tapering and QT?

If rate hikes can curb the rise in the inflation rate, why the need to do monetary tapering and QT?

There were no clear answers from Fed. Maybe the QE was never intended to be part of the permanent monetary system when the last Fed Chairman, Mr Bernake, introduced it in 2008/09. It was meant to be a temporary measure to rescue the failing economy during the "Great Recession" in 2008/09. It was supposed to be removed later and the money to be destroyed when the economy recovers.

When was the last QT?

Fed had planned to start QT in 2018 when it was thought to be the right time. The market sentiment was good and the US's economy was on the rise. But Fed removed the QT program in 2019 as it sensed an economic downturn caused by Covid that was spreading quickly in China.

QE, the Catalyst for the last 12-year

The following chart illustrates that the US's QE was the catalyst behind driving the stock market since 2008. QE can make the market rise, Removing the QE can also make the market fall. The last QE in 2020 caused the US market to rise more than 100%.

Why QT now and not later?

Again, there were no clear answers from Fed. But it is believed that the Fed must have analysed the set of economic data for various major nations and was of the view that it is the correct time to carry out another QT.

One main reason why Fed so stubbornly insisted to carry QT may be because the 2 biggest US rivals, Russia and China, are now having trouble with their economies. This has presented a "window" for the US to carry out monetary policies that might affect & downwind the economy.

Will there not be a US Recession in the US?

US might face a recession if the Fed is so stubborn to continue carrying out Quantitation Tightening (QT) indiscriminately, ignoring the signals of the economy and losing control of the monetary system, thus allowing the US economy to take its "dives down the cliffs".

If the past US recessions in 2000, 2008, and 2019 can be a guide, one can be assured if there is a recession it will not be too serious. Like the recession in 2019, Fed could always halt the QTs and reintroduce QE again to stimulate the economy. Fed has enough monetary tools to tame inflation as well as recession

1) Rate Hikes & the Market in the 1970s

Someone pointed out the 3 rate Fed fund rate hikes in the '70s. He suggested that we are now having the first-rate hike. There might be a recession to follow soon after each rate hike.

https://twitter.com/wmiddelkoop/status/1535785817054248960

This chart will show that there were 2 recessions in 1970 and another one in 1973/74.

However, the situation then was much different from today because the Fed fund rate at that time was higher than 8%. Also, if we scrutinize the Fed chart properly, we would find a recession soon to follow after each rate hike. This might be because a Fed rate hike will always increase the cost and the burden of doing business.

Moreover, there was an energy crisis in the '70s.

https://en.wikipedia.org/wiki/1970s_energy_crisis

2) How the Market Responded to Fed's QT (1 July 2022)

Fed said it started to start quantitative tightening (QT) on 1st June, initially @ USD30 billion per month. So far, Fed has not started the QT seriously but the market has already priced in the QT as shown in the attached chart that shows the plot between Fed's Asset vs SP500.

3) Update about Market Responded to Fed's QT (26 July 2022)

If we add the monetary base to the above chart, we can see that S&P is more tracking the monetary base (MB) than the Fed's balance sheet.

MB is defined as the total currency which includes other forms of money like M1, M2, M3 & MZM (MZM is the broadest base money that includes notes and coins). MB is traditionally the most liquid form of the money supply.

The following chart will tell us that Fed is presently not touching and reducing its balance sheet or the M1, M2 & M3 money supply. Fed must be reducing only the MZM money supply. It must be thinking that it can control inflation by just controlling & reducing the supply of MZM. At the moment, Fed has discontinued reporting MZM since 2021.

In conclusion, we can say that Fed has not actually started to reduce its balance sheet like it did in 2018-2019. What Fed did was merely reduce the existing money supply to control inflation.

3) Update: Market Recovered? ( 26 July 2022)

The market might be serious about a rebound as the Nasdaq 200R has just hit the bottom as shown.

It might have been anticipated that Fed might stop the QT like it did in 2018/19 as the US's economy is getting weaker with the Consumer Sentiment Index at a new low recently.

However, nobody can be certain about what Fed will do next as it might just continue with the QT。 That will "kill" any upcoming rally.

Presently. Russia and China are forecasted by IMF to be economically weaker than before as shown in the following chart. Fed might want to continue with the scheduled QT as it might want to take the opportunity to "destroy" some of the printed money.

References:

1. 3.4 Trillion programs on Mar 15 2020

https://greenleaftrust.com/news/explaining-3-4-trillion-in-about-1000-words/

2. 6-7 rate hike not clear about QT on 23 Sept 21

https://sg.news.yahoo.com/fed-fomc-monetary-policy-decision-september-2021-141145429.html#:~:text=The%20Federal%20Reserve%20on%20Wednesday,policies%20in%20a%20few%20years.

3. Tapering started on 3 November 2021

https://www.cnbc.com/2021/11/03/fed-decision-taper-timetable-as-it-starts-pulling-back-on-pandemic-era-economic-aid-.html

4. Fed signaled QT plan on 6 April 2022

https://www.washingtonpost.com/business/what-the-feds-quantitative-tightening-plans-mean/2022/04/07/4774f172-b627-11ec-8358-20aa16355fb4_story.html

5. QT program schedule released on 4 May 2022

https://www.federalreserve.gov/newsevents/pressreleases/monetary20220504b.htm

6. Biggest rate hike since 2000 - 4 May 2022

https://www.theguardian.com/business/2022/may/04/fed-rate-increase-inflation#:~:text=The%20Federal%20Reserve%20moved%20to,between%200.75%25%20and%201%25.

7. The Fed's 'QT' plan in 2018

https://www.reuters.com/business/feds-qt-plan-then-now-2022-04-06/#:~:text=Along%20with%20announcing%20that%20QT,had%20reached%201.00%2D1.25%25.&text=Come%20September%2C%20the%20Fed%20will,and%20%2435%20billion%20of%20MBS.

8. Outlook of US's economy in 2022 and beyond

https://www2.deloitte.com/us/en/insights/economy/us-economic-forecast/united-states-outlook-analysis.html

Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

The Yield Curves Before the Recession

noreply@blogger.com (Sky Juice) — Sun, 22 May 2022 22:19:00 +0000

22 May 2022

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Investors and stock analysts have always been watching the yield curves carefully, looking for inverted yield curves in order to foretell the health of the present economy of a country. This is because it has been proven many times that a country having an inverted yield curve will usually have a recession in the making.

Examples?

There are 3 occasions in the past 22 years that the US has had its yield curves inverted just before the recession in the years 2001, 2008 and 2019 as shown in the following charts.

The 3 charts are quite similar except the chart for 2019 has had the lowest yield range of less than 3.0%. This recession in the year 2019 was short and could not have been possible without the 3.4 Trillion stimulus economy rescue package introduced by the US Government in March 2020.

How does the Yield Curve Look Today?

Presently, the US's yield curve does not look as perfect and as good as in March 2021 or about 1 year ago. The present yield curve has an inversion between 20yr and 30yr. There is also another inversion between 5yr and 10yr.

The present yield curve could have been affected by the Fed's news around September 2021 that it was ramping up Fed Fund rates and carrying out Quantitative Tightening. In the Fed's plans, they said the Fed Fund rates will be increased 6 or 7 times and about USD 95 billion per month will be removed from the US's monetary system until further notice.

How do present Yield Curves compare?

The US's yield curve looks about the same as China's yield curve except the US's yield curve is much flattened above the 2yr. They are definitely much better than Russia's yield curve which is inverted right now.

One can see from the above chart that the US's yield curve was quite normal about 6 months ago whereas China's yield curve had never changed much. Russia's yield curve had been inverted. It looked better about 6 months ago and must have been affected badly by the Ukraine war that started in February 2022.

Will there Not be a US Recession in the US?

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Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

Is this a Bear Market Rally or a Recovery Rally?

noreply@blogger.com (Sky Juice) — Wed, 18 May 2022 05:28:00 +0000

Jump to

1) Update: The largest Single-day Fall (19 May 2022)

# largest single-day fall, bear market rally, recovery rally, Dow Jones

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18 May 2022

The Dow Jones Industrial Average (DOW) came back and broke the Head and Shoulder line (H&S) last night as shown in the attached chart below. This has made the market wonder if this is a "bear market rally" or a real market recovery rally. This article will make an attempt to analyse it.

What Happened?

The investors were expecting a rally to happen for the following reasons

1. SP500 was about 19% down from its peak in Jan 2022. It is expected that investors will make attempt and try their best to avoid SP500 slipping to 20% which will make SP500 officially a bear market. They made 2 attempts to save Nasdaq from slipping into the bear market at end of April but failed.

2. The trading calendar was positioned as if with a purpose to "push market sentiments up". The retail sales estimation figures were in favour and Powell and many money policymakers would speak afterwards;

3. The market was down for nearly 4 months. It is about time at least for a temporary rebounce.

However, although the US market was up last night, it is expected that the present stock rally is just another bear market rally.

Why?

1. The US market was driven by "hope" mainly due to the Quantitative Easing (QE) money although some might not agree. The SP500 took off soon after Fed pumped in about 3 Trillion in March 2020. Later, Fed pumped in another 2 Trillion.

Although the companies have improved their earnings during the period, it is believed the bulk of these earning increases is spurred by the QEs rather than the market recovery. Now with the QEs about to be removed in June and the dismaying performance of earning revisions in April, it is expected that the market will remain under tremendous pressure to improve its earnings & performance going forward.

(doubleclick picture to go the website)

2. The companies elsewhere are not performing as well as those in the US

3. China presently has the worse economic report card so far; its dismay performance is likely to throw a spanner into any US recovery attempts.

Chance of Fed Removing or Lighten QT?

Many investors are hoping that Fed would remove or lighten the Quantitative Tightening (QT). This is especially when Fed ended its first attempt at QT in 2019 earlier than expected because the market was not "gung-ho" about Fed's QT.

Whether Fed would insist to carry out QT this time in June is not clear but at some point and time, we know Fed will have to do QT to destroy the "printed money". This time, it might be a good window for the Fed to do so because the economy of Russia and China are all in terrible shape. And a little setback in the US economy might not look too bad or out of tune or out of the order.

In Conclusion

It is therefore expected that the US and the World market will continue to fall especially when the QT starts as scheduled in June. The only hope for a market recovery is for Fed to remove or lighten the QT policy but Fed might not want to miss the window to carry out the QT.

Update: The Largest Single-day Fall (19 May 2022)

DOW failed to break the Head and Shoulder line (H&S) last night. This caused DOW to fall more than 1,164 points or 3.57%. Although it was not the largest single-day fall since the last Great Recession (2008/2009) in terms of percentage, it was still the largest single-day fall in terms of points.

On Oct 15, 2008, DOW fell about 724 points or about 7.7% in a single-day.

Going forward, it is likely to see DOW continues to test the support level @ 31,000.

Not Officially a Bear Market

Although Nasdaq is officially in the Bear Market, it is not the case for DOW and S&P500. This is because DOW and S&P500 have never fallen below the 20% from its peak as shown in this chart.

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Disclaimer: This article is for information and educational purposes. Readers are advised to conduct their own research and study to make their own investment decisions.

Reference:

Head and Shoulder Pattern

Only Shanghai had Surplus Among 31 Provinces in 1st Half 2021

noreply@blogger.com (Sky Juice) — Sat, 23 Apr 2022 13:50:00 +0000

23 April 2022

Jump to

1) Update： 16 August 2022

In the first half of 2021, Shanghai was the only province that had a "surplus" of about 94.26 billion yuan in revenue collection. The rest of the 30 provinces in China were in financial debt. This is a clear contract to the year 2017 when 6 provinces, namely, Guangdong, Jiangsu, Zhejiang, Fujian, Beijing and Shanghai had a surplus.

Doubleclick to visit the webpage

The deficit was recorded despite the various efforts made by various Provincial Governments to cut down their expenditure as shown in this chart

The above 2 charts clearly express that China's economy is unlike before. They are now facing an economic downturn. Many Provincial Governments are not self-sufficient, requiring financial assistance from the Central Government.

Reasons?

Most Chinese Analysts avoided giving any reason for the revenue deficit choked up by various Provincial Governments. But some trying to explain that the occurrence of this deficit is quite common. They explained that this is a natural occurrence when there were policy changes in the deployment of funds by the Central Government.

However, we are all aware of the following events which have taken place and were ongoing during these difficult periods:-

a) Covid Shutdowns and Control Measures

The zero Covid policy brings about frequent shutdowns in various cities and rural towns and counties in order to control the Covid Spread. Someone estimated that this has cost China some $45 billion per month or about 3% of China's GDP;

b) Power Failure and Electricity Load Shedding

The country suffered a country-wide power failure and load shedding after they banned the import of Australian coal end of 2020. Without allowing the power generating companies to increase the electricity tariff to cover up additional expenditure of importing the more expensive coal from other countries, the generating companies resorted to cutting down generation capacity causing country-wide power load shedding. These frequent power failures and load shedding must have hit many industries badly.

c) The US-China Trade War

The US-China Trade War started around 2018 and continued into 2021 has caused many foreign companies to pull their manufacturing facilities out of China. Such mass exits have caused many to lose their jobs and earning power, reducing the Provincial Government's revenue;

d) The Xinjiang Cotton Controversy

Although the Xingjiang Cotton Controversy was known to the public around March 2021, the event took place about a year ago in March 2020 when BCI, the Better Cotton Initiative took the initiative to suspend the licensing and assurance activities in Xinjiang. This action by BCI could have caused many jobs in Xinjiang as well in other parts of China.

Update： 16 August 2022

The financial condition of China has deteriorated further in 1st half of 2022. This time, all 31 provinces and cities in the mainland were unable to make ends meet. Guangdong, Henan, and Sichuan are the most serious with Sichuan rumored to be the worse for many years to come.

Henan had bank runs in some local banks.

Shanghai, Tianjin, and Hainan which used to be better provinces with higher revenues are now in the red.

The financial situation of the 31 provinces is worsening as shown in the following table.

Source： Yahoo News

How Badly Will the World's Energy Supplies Be Affected by the Ukraine War?

noreply@blogger.com (Sky Juice) — Mon, 28 Mar 2022 02:20:00 +0000

It has been told many times by some that the World will be in trouble if they continued to oppose Russia in trying to take over Ukraine. The Russian leaders have been quoted to say that Russia was only trying to solve a "domestic problem" in Ukraine. Putin even called this Ukraine military action a "special military exercise."

Voices are heard everywhere, threatening those "unfriendly nations" who recently sanctioned Russia that they will get the worse when Putin asked them to pay their natural gas bill in "Roubles" instead of the Euros or US dollars.

It is not the intention of this article to find out if such voices are correct or the unfriendly nations will get into real trouble. It intends to present a correct picture to the reader for them to judge for themselves if such threats are real.

The Supplies from Russia

Russia is a country blessed with a lot of minerals and supplies that the World needs. Natural Gas is one of them. Countries near Russia, such as Poland, Germany, China are not only getting natural gas in LNG tanks but also piped gas through long pipelines all the way from remote Russian areas such as Sibireas. Over 70% of the country's reserves are currently held by Gazprom, a Russian state-owned company.

How much Natural Gas is from Russia?

One can find this information from a lot of sources. The ones shown here are from Worldometer. The following picture shows the yearly natural gas production (in MMCF) of the 10 largest gas producers of the World.

a) In numbers

b) in Pie Chart

How the Russian Gas would affect the World Supply?

As can be seen from the above chart and table, Russia supplied about 14% of the World's natural gas. The US and the rest of the World supply the remaining 86%. With this kind of supply distribution, it is hardly a conclusion that one can make to say the World's natural gas supply would be in trouble if Russia were to take drastic actions about supplying its natural gas.

Moreover, the recent natural gas price hikes have already broken down the cost barrier and quenched the fear for many countries to consider bringing in LNG supplies from other countries instead of getting supply through the usual gas pipelines.

However, in whatever form the gas sanction or supply restrictions can be, they will not only bring temporary suffering & hardship to those countries who get direct supplies from Russia, it will also hurt Russia's economy badly as well. Therefore, it is never a wise decision to be made.

Update: 28 March 2022

China's Sinopec Bows Out Of Russian Petchem, Gas Projects

China has been taking natural gas supply from Russia, which is China's third-largest supplier of natural gas, after Australia and Turkmenistan, delivering 16.6 billion cubic meters (bcm) (pipeline plus liquefied natural gas [LNG]). It accounts for 10 % of China's total imports.

In Feb 2022, Russia, China agree 30-year gas deal via a new pipeline, to settle in euros. Russia and China have been talking about this contract for the last 8 years, Understand China signed the Contracts to reduce the dependency of supply from the "Quad".

Recent Russia's actions in Ukraine must have changed China's perspective. China's Sinopec has just signed a 20-year contract to get about 4 mt of natural gas per year from a US company in November 2021.

Sinopec was reported to have bowed out of $500 million Russian Petchem Gas projects just because one of the partners, Gennady Timchenko, has been sanctioned by the EU and Britain.

Update: 28 March 2022

Oil Production in Barrels per years by various countries

Similarly, for oil production, Russia supplied only about 11% of the oil requirement with the rest of 89% from other parts of the World as shown in this Pie Chart

a) In numbers

b) In Pie Chart

Runtime Error 429 in Using Selenium Basic

noreply@blogger.com (Sky Juice) — Sat, 05 Mar 2022 10:39:00 +0000

5 March 2022

Selenium Basic can be a very useful tool when one is writing an Excel VBA Macro to "scrape" data from a webpage.

In the past, one will have to use "imacros" which is a special paid software for scrapping data in Excel because one cannot often use Excel's built-in "data queries" to extract data from a webpage. These webpages are usually written using VBScript, Javascript or other forms of HTML tools.

Please click the picture for more information

The VBA that is used to extract data from a webpage using the normal tools can run into a lot of problems and often took several processes just to complete a simple task. Selenium Basic, on the other hand, can cut the Excel macros down to just a few lines for the same kind of work. For example, it allows users to copy the whole table & then paste it onto Excel as an Excel table instead of a jpg picture. It is much more efficient; also, the VBA macros will run much faster, limited only by the network.

Error Messages

The only snag about using Selenium Basic is the lack of support documents, especially about how to handle script errors. This is because Selenium Basic is still in the early stage of development. One of the errors that come up recently is the Run time error 429 as described by a forumer in the "Stackoverlow" forum:

Click the picture to visit the article

What is Error 429?

Error 429 is a common error occurring when one tries to automate office or other similar works. According to Microsoft, this error when occurring in Microsoft Office VBA work could be due to the following reasons:

There is a mistake in the application;
There is a mistake in the system configuration;
There is a missing component;
There is a damaged component.

Microsoft suggested a few solutions as shown on this page. The solutions can be summarized in simple terms as follows

1. Check & verify the office application is working;

2. Re-register the applications;

3. Check & add the "CLSID key" to the Registry if there are missing in the Registry;

There are other methods suggested which the readers should read in detail.

How the Error 429 happened?

It happened when one is trying to use special automation software called "Auto Power-On and Shut Down" to turn on and shut down the PC at a specific time automatically. This software has been used before for Excel macro many times without any hitch. The Excel VBA macros were also tested to run well on another computer. on this PC in question, Windows Excel will startup but it would stall whenever it reached the following VBA script.

driver.Start "Chrome"

The solution

The re-registration of the software "Auto Power-On and Shut down" as advised by Microsoft solved the problem. One will need to run the following script in DOS-Prompt as an administrator:

C:\Program Files (x86)\Auto Power-On and Shut Down\Auto Power-On and Shut Down.EXE /regserver

In the above example, the software, "Auto Power-On and Shut Down", was defaulted to be installed in C:\Program Files (x86)

Reviving ASUS eee901 NetBook PC for Data Scrappings

noreply@blogger.com (Sky Juice) — Sat, 05 Mar 2022 07:30:00 +0000

5 March 2022

# eee901, Network, SSD upgrade, mSATA, mini-PCIe, Windows

This ASUS eee901 was a very popular netbook PC about 10 to 15 years ago. It was one of the cheap netbook PC that uses SSDs for memory storage. It was very hackable and many hobbyists like to do all sorts of modification work using this PC.

Because the netbook uses only 5 Watts. I bought a couple of these for stock data mining which required the PC to be operating 24/7. When the SDD finally failed to work and plenty of free stock screening websites are available free for downloading, I decided to retire them some 5 years.

Lately, I took up the interest to do stock data mining again. This time is for data that are not available anywhere on the Internet. The choice then was between buying a new netbook or upgrading the eee901 with a faster and bigger SSD.

What SSD Were Used?

These ASUS netbooks use a special SSD called mini-PCIe SSD. These SSD has a similar form factor as the mini-SATA (mSATA) SSD. Mini-PCI SSD is not easily available and mSATA SSD cannot be used to replace Mini-SSD directly in the ASUS netbook.

The Final Choice

.I decided to revive the eee901 for the following reasons

1) Netbook has now been replaced by the tablets which run on either Android or iOS. They are not good for running the Excel macros which were written earlier for data mining;

2) There are adaptors available to convert mSATA SSD to mini-PCI SDD for use in eee901. The adaptors are fairly cheap. The SSD replacement and upgrading work is estimated to cost less than SGD$30/=. It is much cheaper than a new netbook; moreover, I have a few spare mSATA SSD lying around and I can use them for the upgrading work.

The only Snag

The eee901 PC has two SSD; one 8GB master SSD that is accessible after removing the cover; the other is the 4GB slave SSD that is hidden inside the PC. When the new adaptor SSD is used to replace the 8GB Master SSD, the PC will recognise only the new adaptor SSD as a slave. The BIOS will always give this warning error about "master SSD not found" whenever the PC is booted up. The warning error cannot be defeated because it is an error message. It will stop loading up the Windows. This is not good when one is trying to automate the PC to start up windows and run the excel macros automatically.

Installing the adaptor SSD to replace the hidden 4GB will solve this startup error but the adaptor SSD must be shortened because the hidden 4GB is half-height. It is around 50 mm long whereas the new adaptor SSD is around 70 mm long.

Can the Adaptor SSD Be Shortened?

Yes, it can. One must use 1/2 height mSATA with a short piece of PVC plastic added as shown in this automated picture. There is just enough room in eee 901 for the installation of this new and shortened adaptor SSD

How to Install the Inside the eee901?

Here is one of the video

Enhanced Performance

Users will find the replacement Adaptor SSD running much faster than the original SSD. This is because the mSATA is of the more advanced Technolgy. The mSATA's speed can be several times that of the original SSD.

With the larger capacity SSD, one can use the original Windows 7 with the response and speed, at times, even better than the Intel E8400 PC with the hard drive. Some has tested eee901 using Windows 10 but the response was a bit sluggish as reported because Windows 10 will require 3 GB RAM to run efficiently. The eee901 only has a maximum RAM of 2 GB.

DIY Protective Covers for Continuous Glucose Monitoring (CGM) Sensors

noreply@blogger.com (Sky Juice) — Sun, 20 Feb 2022 11:04:00 +0000

19 February 2022

About 1 in 10 people will have diabetes. This number of diabetes is expected to double in future years. It is a serious disease that will cause death if it is not properly managed and controlled. The disease is more commonly found in aged people. People get diabetes when their blood glucose is too high. This glucose in the blood is commonly referred to as blood sugar,

This article will not go into details about controlling and managing blood sugar as there are lots of good articles written about this on the net. I just want to share about how to DIY a cover for the Continuous Glucose Monitoring (CGM) Sensors when one happens to wear one.

What is Continuous Glucose Monitoring (CGM)?

There are generally 2 common types of methods to measure the level of blood sugar at home. One of them is by using a glucose meter with a special test strip;

the other is by using a special sensor that has to be planted on our body.

The former is most commonly found at home and have been used for years. The latter is only available in recent years. It is by far the most effective way to control and manage the blood sugar in our bodies. More details about CGM can be found here and elsewhere on the net. This article will only talk about how to best secure and how to DIY a cover for the CGM Sensor when it is installed on our body.

Why the need to secure the Sensor?

Usually, the sensors are provided with means to secure the sensor to our body as one can see in the above picture, But it does not look really very secure. It is not that it will fall off that easily; it is just the feeling of most people who wear them that the sensor could just "shear off" when it hit against something like a door jamb. Besides, there is always this sensation of arm-sore that will not go away even after days of wearing the sensor. This could be because the needle of the sensor could be moving around when one is flexing the arms.

As such, one can find a lot of companies selling specially made covers or patches to secure these sensors. They are not cheap either.

How to DIY the Cover?

There is actually no requirement specified by the manufacturer nor there are any standards available for the design of the sensor cover. It is generally felt that the cover should have the prerequisites:

a) It is waterproof;

b) It must have a strong adhesive to stick firmly. Easily replaced.

c) It must not cause skin occlusion

It must be waterproof so that water will not soak the sensor or its adhesive base when one is taking a bath. It must have a strong adhesive itself to stick firmly to the skin & easily replaced. Most important of all, it must not cause skin occlusion which will often cause skin irritation, leading to skin rashes or inflammation.

Searching around, we found the 3M micropore tape or similar most suitable for the DIY as it fit the 3 prerequisites. The 3 M tape comes in 4 sizes, the 3", the 2", the 1" and the 1/2". The most common one found in the self is the 2", the 1" and the 1/2"; but, the most suitable one for use as a cover for the sensor is the 3" type.

How to Use the Smaller size 3M Tape?

The only way is to join the pieces together using the following step by step. In this case, the most suitable one is the 1" type.

1) Cut 3 pieces of 1" tape; each tape is best to be roughly about 3.5 in length;

2) Laid the tape on the glass. In this example, a mobile phone was used;

3) Lightly place the 3 pieces of tape, overlapping the edges as shown attached. Apply some pressure over the overlapping edges to stick the pieces together;

4) After that, remove the tape;

5) Cut a small round piece of plastic using a small bottle as the template as shown as stick the round piece right in the centre. the plastic round piece should be larger than the adhesive of the CGM sensor. This is to ensure the tape will not stick to the sensor and the adhesive and the tape can be easily replaced if necessary;

6) Trim the DIY sensor cover and place the cover over the sensor as shown.