Week14: Market update, Opportunities in Equities & Gold

Disclaimer: All information shared is solely for learning purpose and it does not constitute to a buy/sell call.

To receive regular updates on latest news affecting the market, please join us in our ever-growing Telegram group @ http://t.me/Investwhizz

 

 

As the world is moving into a pandemic, I would like to sincerely urge everyone to stay united and be responsible in our own ways (social distancing, stay at home if unwell, avoid touching your face & eyes unnecessarily).
This is not just a battle of the front line workers/unsung heroes but a battle for all of us. While it is painful and difficult, I am sure all of us will get through this positively.

 

During the past month, I have immersed myself on this personal initiative #standwithyouSG where a platform have been created for members of public to step forward to show gratitude and provide some words of encouragements for the unsung heroes. I am grateful to witness people from all walks of life coming forward to support this initiative. We have created a >> #standwithyouSG page << for the event and would be uploading the video once it is ready.

 

In view of COVID-19, we have also decided to provide key COVID-19 confirmed case information along with the technical charts of key markets indices (US, UK, SG, CN, HK, JP, AU, TW & IN) in a Single Page. The aim is to help us save time on loading each of the data charts to understand the current situation of the market. Link to the page >> COVID-19 Impact <<

 

 

Market updates:

  1. The US dollar index (USDX) extended its decline to 100.90 ahead of the jobless claims and Q4 GDP data. US cases surpass 60,000.
  2. ⛽️ WTI crude futures edged higher to 24.27 on smaller than expected weekly US crude oil inventory. 1.6 million against 3.3 million expected.
  3. 😃 The S&P 500 (US500) marked its best three-day rally since 1933 on hopes the $2 trillion fiscal stimulus package passed by the senate will support the economic fallout. The Dow (US30) soared 6.38% or 1351.62 points to 22,552.17.
  4. 🌟 Gold jumped to $1625 after US initial jobless claims surged to 3.28 million for the week ended March 21, dwarfing the previous record high in October 1982 (695k).
  5. 😷 US dollar index (USDX) declined for the fifth consecutive day to 99.5. The yield on 10-year Treasury bonds dipped to 0.82%. The US has overtaken China as the country with the highest number of COVID-19 cases.
  6. Equities had rebounded into this week after two weeks of substantial declines across the globe. That said, a series of data from March will see the light of day and are expected to shed light on the extent to which Covid-19 had struck the respective economies. The word here may remain ‘caution’ into the end of the week for markets with containment efforts still going strong and the true extent of the damage indeterminate given the unknow duration of the virus’ stay. India market, already in lockdown, will be closed on Wednesday and Thursday while Taiwan will be away on Thursday.
  7. As noted by UN Secretary-General Antonio Guterres at the G20 meeting, “It took the world three months to reach 100,000 confirmed cases of infection,” he said. “The next 100,000 happened in just 12 days. The third took four days. The fourth, just one and a half.” We are now at over 500,000 cases. Although the Covid-19 infection appears to have slowed from the extreme spread in some European regions, by no means does this suggest that the situation is improving for many struggling to cope. This altogether suggest that we could continue to see this being a key concern in the next coming weeks, if not months.
  8. Month end rebalancing will be one to watch going into the fresh week, particularly for equities that had fallen substantially in the month of March in light of the Covid-19 situation striking the global economy. Funds are expected to pick up the beat equities into the month. However, with the turn of the month, we will also be anticipating a series of March economic readings including the US NFPs that could altogether jeopardize sentiment once again.

 

While the economy is volatile, I would like to stress that in every crisis, there would be hidden great opportunities for us to benefit.

 

Below is the poll that I have taken from Investwhizz telegram group, thank you to those whom have participated.

 

Question: In midst of these virus scare and stock market crashing, which group are you currently in?

 

Group A – topic among peers are largely focused on how many % have been lost
1. Person did nothing, not selling anything and eventually suffered paper loss due to correction
2. Person planned to buy more, or would have bought some few days ago

Group B – not vested earlier but entered some or planning to enter

1. adopted wait and see approach, yet not sure where and when is the bottom

 

Group C – managed risk by hedging also focused on stocks that will go up due to virus

1. held on the long stock portfolios
2. shorted index so that exposure is neutral or short biased
3. used the gain from shorts to offset the losses from stock holding
4. purchased stocks related to technology, medical and health care products

Group D
1. Did not do anything in the stock market yet; more worried on job security
2. Went on to look at various cost cutting measures to tie through this period

Which group are you in?

Poll results*

 

As you can see, people’s view are mixed and this is exactly reflecting in the stock market. We observed that Mr. Market is moving 1 day limit up subsequently the other day limit down. This means that Mr. Market is highly volatile/confused where loads of opportunities are available on the table.

 

Responses for the poll:

Group A & Group B

1. If you are buying index, we would believe it is probably not the best time yet as the waves of defaults are just starting to surface up. Companies generally has sufficient funding up to 3 to 6 mths to sustain before giving up. Do monitor the situation closely.

2. If you are buying individual stocks, do hunt for stocks that has the following characteristic:
a. Has a wide moat
b. Has the ability to scale up during and after this covid19 period
c. Resilient stocks that business model would be strong enough to tide through the situation and go back to normal once covid19 is over – such stocks rarely have discount hence is a great sale to buy at below intrinsic value

Having patience is the key here – do look at big picture of the charts to get some hints on how low market can go.

 

Group C – you are on the right track – do private message me in Telegram group separately to share your experiences – would like to brainstorm ideas together to take it into the next level

Group D – Focus is on job security
Please review and go through what your company is currently going through, sitting and waiting may not be beneficial.

Question to ask yourself:
1. Is the business model sustainable in this environment?
2. Will the company become obsolete and irrelevant?
3. Is the company having cashflow issues?
4. Are they having technology to turn things around?

5. has the management think out of the box to support the business to thrive?
(I see many companies has fast turnaround to convert business into e-business and continue to be business as usual even in crisis)
6. Has the company taken proactive steps to protect you during and before the crisis started?

Having foresight is important as the same skill set would be used to keep the business afloat during such period.

 

Note: If you would like to know exactly what happened to Gold for past 2 weeks, I am happy to share that we have decoded it successfully. Below is the long term chart of gold & S&P 500 for your easy reference. Do join http://t.me/Investwhizz to join in the community for more in-depth discussion!

 

 

Do stay safe & strong for us to be able to sail through this financial storm together!

 

Cheers,

Ernest Koh

InvestWhizz Founder
#covid19, #SG United, #standwithyouSG

 

P.s. As mentioned in Jan, I am happy to share that Invest Whizz Exclusive have been launched. Similar to Investwhizz chat group, this group is F.O.C. This platform strictly by invitation where highly committed individuals have gathered to take Trading/Investing into the next level. 🙂