chaos is a ladder
On Wed 10 Mar 2021 6.27pm, I emailed Clients my latest post titled 'Of Corrections, Tech stocks & Value'. I've decided to change the title to 'Chaos is a Ladder' to give that much needed 'zing' to this writeup! After all, you buy when there's blood on the street right?
'Dear Clients .
How is March treating you? Over here, im superbly busy! Gone are those days where brokers look only at their own local exchanges' stocks. Today SG has 700+ stocks listed, HK 2,500+ & US 6,000+ stocks.
At any one time, a client may pick and ask me my opinion on a certain stock across ALL major exchanges. So you may start to understand how busy i can get on most days! (There is also the occasional client who seeks my views on Bitcoin too)
Obviously for a CMT (Chartered Market Technician) like myself, a quick way to size up the stock is to consult the Chart.
As the great US financier Bernard Baruch famously say 'Show me the Chart and I'll tell you the News', this couldn't be further from the truth!
Now let's get back to Mr Market! Here's some quick notes for your perusal:
1. As per my 1 Feb 2021 writeup*, the S&P500 Index (SPX) preferred area of support confluence in this correction is still the 3550 - 3590 support zone (pink rectangular bar).
Note the 'reasonable' support zone has widened slightly to 3508 - 3678 (being 61.8% & 38.2% Fibo retracement, not shown) due to a new all time high achieved after my 1 Feb writeup. .
So nothing much has changed and therefore there is no new angle to post - as mentioned previously the US markets need to take a decent breather to conserve the required 'energy' to launch the next major rally.
Btw, given how little SPX has been giving us in terms of pullbacks over the last 5 months, could there be a chance that this current correction may be over? Long story short, as Bran in Game of Thrones looked you in the eye and said 'Chaos is a Ladder', go BTFD!
. 2. As for the so-called 'crash' in Tech stocks, the pullback in Nasdaq is now about 12% which IMHO is still pretty much a garden-variety pullback. In the past 5 years, correction periods in the US markets tend to be swift & short affairs, compared to the 'longer' rallying periods. So it is quite imaginable that most investors aren't used to sitting through a correction phase.
Pls also see below my opinion to a Client dated 26 Feb 2021 on the recent Tech stocks selldown.
3. The new kid on the out-performance block is our dear STI (Straits Times Index).
In a twist of events, when funds rotate out of Growth (Tech) stocks & go into Value (old economy & worth-a-yawn stocks), the STI (which commentators lamented just last year on the lack of sexy growth stocks) suddenly shone like a brilliant gem in a sea of 'overvalued' tech stocks. Well, every dog has its day and I'm glad I've continued to ask my clients to add those solid STI component and Bank stocks to their portfolio.
For your reading pleasure - https://www.bloomberg.com/news/articles/2021-03-09/worst-asia-stock-index-turns-biggest-winner-in-value-comeback
**BTFD - many clients ask me what is BTFD. Apologies for the acronym, it stands for 'Buy...the...f******...Dip'!
Live Long & Trade Well!
Thank you & regards.
Thomas Ng, CMT
Principal Trading Representative
chart source: tradingview.com
image source: medium.com/@samitsheth/got-s7e4-recap-f2e9854dcc5a