Stock Market Books

Sunday, January 27, 2008

Market Outlook 2008 Week 5

Last Friday, the US market dropped 171.44 to close at 12,207.17, it was up 100 points in the morning.

The Malaysian investors would normally like to refer to the US market before making their investment decisions. As one can see that it is quite volatile in the US market, therefore, the Asian markets would be very unpredictable as well.

You need to read the market carefully and correctly. Use the chart. If you feel you are in the wrong side of the market, just cut your losses short and get out of the market.

Buy when the counter dropped to the support level and sell on rebound.

The US has tried very hard to stabilise the market so that the economy could be stabilise as well.

Last week, the Fed has announced a rate cut of 0.75% from 4.25 to reduce to 3.5% to calm the market. But market was not calm, the market still dropped after the rate cut announcement. It was only on Wednesday afternoon that the market had rebounded.

The Asian markets, however, have rebounded.

The Bush's administration has went ahead with its USD 145bn stimulus plan to help the US economy but many felt that it is an insufficient amount against the mammoth subprime mortgage meltdown.

In Switzerland, the Prime Minister Datuk Seri Abdullah Ahmad Badawi said that Malaysia economic fundamentals are strong enough to withstand a recession in the United States.

He said that he did not foresee any major effects on the economy due to the country's long-term and forward-looking policies.

He said that "we can face it because of our strong and stable government." He was in Davos to attend the World Econimic Forum annual meeting.

The economy may be strong but the stock market reaction is a different thing. Investors need to watch the market carefully. If you still want to enter the market, look for stocks that have corporate actions or look for theme play. The election play might be still on but it might have been overplayed because the election is around the corner.

To read my Chinese article, go and get a copy of Guang Ming, Penang Edition, on Monday.

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