It's a brand new day, a day closer to my wedding. In less than 24 hours, I'll have someone to share the joy and sadness of my life, and if footballers claimed that they live for football and football is their life, than my wife-to-be will be sharing my joy of making money and her sadness of having to share my losses. Ha, for football is to the footballers and stock trading is to me!
So how did the market goes after 1am last night, after I took profit in OSG at $38.75?
The major indices started markedly higher as the previous session's gains were extended amid news that by Australia's Reserve Bank hiked its key lending rate by 25 basis points to 3.25%. Though the rate hike may strike some as an unlikely impetus for higher stock prices, global participants were encouraged by the symbolism of the act, since it suggests that the global economy has strengthened. That consideration helped drive the Dow Jones World Index to a 1.9% gain, which is its best percentage gain in two months.
Weakness in the U.S. dollar continues to bode well for stocks, especially for shares of multinationals. The Dollar Index dropped 0.5% this session, but it is still trading above its 2009 lows.
After I went to bed, despite a downward drift in afternoon action, stocks were able to march considerably higher in broad-based fashion for the second straight session as overseas gains and a weaker U.S. dollar kept buyers in the market.
So it was a great night where NYSE had 77% advances versus 21% decline and NASDAQ 72% advances versus 24% declines. My stocks did very well last night, OSG closed at $39.14, a massive 7.23% higher, BKS up 4.75% to close at 4.75%, PMTC up 0.51% to close at $13.80, Citibank unchanged at $4.67, Forest Lab up 1.84% to close at $29.39. The stock that I am monitoring, EIX, closed 1.83% at $33.47. Despite the bull run for the last few days, I personally do not believe we have entered a multi-year cyclical bull market for developed equities. I think equities remain in a broad range trading environment and the latest Morgan Standley research seems to support my ideas (please see my previous blog for US market charting). Anyway, I can sleep easy knowing these are fundamentally good companies and my 30-20-50 rules still holds.
Since I am targetting 10% returns to sell within a month, I still stay neutral for EIX although the stock has moved up about 4% since I last recommended, as I believe it will drift lower over the next few session. I am still waiting for the stock correction to buy. For the rest of my stocks, I am still holding for the 10% target to take profits.
With that, I am looking forward to enjoy my wedding dinner and better returns from my stocks. See you guys next Monday.
Francies Cheng
BBus MAppliedFinance
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