Enjoy while you can
August 22nd 2007 15:06
The magnitude of the volatility in the market was relatively mild this week so far as compared to what was seen since late July. It even looks like as if calm has been restored. One way or another, enjoy the moment while you can.
There was the Feds and now the reported corporate earnings that was factored into the market, providing some fresh lead away from the credit slump induced market free fall. On the back of strong reported earnings on Wednesday, the ASX S&P 200 benchmark index rose 15.7 points to 6005 points at closing ending the day slightly higher after a volatile session.
How far can the 'temporary' calmness run? Investors are nonetheless still edgy and extremely cautious to any possible negative leads. Until everything is known about the credit mess, sentiments would be at best shaky with weak foundations. How long can the calm stay depends on how long investors perceive the confidence measure built by the Feds to run.
While the majority see the discount rate cut by the Feds last Friday as a positive sign, there are some who thinks otherwise. For instance, Hong Kong financial columnist and co-founder of The Lion Rock Institute , Andrew Shuen, provides his reasons, in a rather laymen fashion, that could represent the 'otherwise' faction:
'I suddenly realize, the Fed basically is hoping to do just enough to slow selling. Notice I used the word SLOW and not STOP.
[...]
Also, part of the tactical reason to announce on the 17th August Friday, was because a lot of put options in the US was going to expire. By jacking up the market for Friday, a lot of bear's financial strength was weakened (mine certainly was), thereby reducing the desire and ability to further short the market. The effect will be SLOWED selling.
Falls of a couple hundred points a day for the HSI or a 100pts a day for Dow is highly acceptable to the Federal Reserve. The fed will have to see 1000pts drop on consecutive days to act again.
For all those people who says this is over. I can tell you this...
IT AIN'T over until every asset can be priced.
Then with all assets priced...
IT AIN'T over until those with no equity left is wiped out,
IT AIN'T over until banks announced their losses,
IT AIN'T over until everyone knows where their balance sheet stands...
Then its over.
When it's over... do you think the market will be higher or lower than now?'
It is still early to tell anything. And most likely there would be more down time before things get better.
There was the Feds and now the reported corporate earnings that was factored into the market, providing some fresh lead away from the credit slump induced market free fall. On the back of strong reported earnings on Wednesday, the ASX S&P 200 benchmark index rose 15.7 points to 6005 points at closing ending the day slightly higher after a volatile session.
How far can the 'temporary' calmness run? Investors are nonetheless still edgy and extremely cautious to any possible negative leads. Until everything is known about the credit mess, sentiments would be at best shaky with weak foundations. How long can the calm stay depends on how long investors perceive the confidence measure built by the Feds to run.
While the majority see the discount rate cut by the Feds last Friday as a positive sign, there are some who thinks otherwise. For instance, Hong Kong financial columnist and co-founder of The Lion Rock Institute , Andrew Shuen, provides his reasons, in a rather laymen fashion, that could represent the 'otherwise' faction:
'I suddenly realize, the Fed basically is hoping to do just enough to slow selling. Notice I used the word SLOW and not STOP.
[...]
Also, part of the tactical reason to announce on the 17th August Friday, was because a lot of put options in the US was going to expire. By jacking up the market for Friday, a lot of bear's financial strength was weakened (mine certainly was), thereby reducing the desire and ability to further short the market. The effect will be SLOWED selling.
Falls of a couple hundred points a day for the HSI or a 100pts a day for Dow is highly acceptable to the Federal Reserve. The fed will have to see 1000pts drop on consecutive days to act again.
For all those people who says this is over. I can tell you this...
IT AIN'T over until every asset can be priced.
Then with all assets priced...
IT AIN'T over until those with no equity left is wiped out,
IT AIN'T over until banks announced their losses,
IT AIN'T over until everyone knows where their balance sheet stands...
Then its over.
When it's over... do you think the market will be higher or lower than now?'
It is still early to tell anything. And most likely there would be more down time before things get better.
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