Master Rider Blog

Beware of the Crude!

May 9th, 2008 NW Teong

I have some interesting finds when I look back at some of my earlier blogs posted on this website. For instance, on 4 Dec 2007 I have posted a blog “Santa Claus Rally?”. In this blog, I have used the Fibonacci series (in a light hearted way) to predict that the next major market correction will begin at around end Jan or early Feb of 2008. On hind side, the market indeed had a severe correction but not from end Jan, instead it started to correct heavily since the beginning of Jan this year. However, we will still be able to avoid this pain if we have taken action on 4 Dec 2007 (the day I posted the blog).

Some of my past blogs worth mentioning are blogs “Market Outlook” and “FOMC” which I posted on 29 Oct and 30 Oct 2007 respectively. In these blogs, I have predicted that the crude will test the US100 per barrel soon! In another blog “A Tale of Two Markets (II)” on 7 Nov 2007, I have mentioned about some triggering events which investors should be mindful of, these are a big blow up of US subprime loan, crude oil shoots pass US$120 per barrel, etc.  Yes, indeed we need to be careful as the crude has just surged pass US120 per barrel and is trading at about US$124 per barrel currently!

Everything seems to look good at this moment. The Baltic dry index has continued to surge after it had corrected to reach its recent bottom on 31 Jan 2008. It has surged so much that it seems to re-test its historical high soon. The transport sector index in US is also surging with similar ferocity. The semiconductor index (^SOXX) also creeps up gradually since the beginning of April 2008. Interestingly, the yield of 10 year Treasury bill (^TNX) has started to rise since the middle of March 08. This indicates some stability in the debt markets (at least this seems to be the case). Little wonder that the stock markets have surged in tandem with all these indicators.

What to expect now? With the crude at historical high of US$124 per barrel, it is the single best excuse to lock in the profits in the stock markets. In short, the markets are poised for what I called a mid-term or mid-year corrections, this is especially so if crude maintain at around US$120 per barrel. Do not under-estimate the impact of the crude. There is simply no good replacement for crude at this moment! Again, caution is needed in this volatile market.

If you care to join me, lock in the profits and go for a short holiday while markets consolidate. However, continue to monitor the markets and use strategies that I talked before and wait for another opportunity to build up your portfolio again. Cheers!

Note: From the overwhelming queries on my e-publication that I received, I wish to use this opportunity to say that while the samples used in the e-materials might be from certain market, the theory, framework, valuation model, portfolio spreadsheets, investment / trading /investrade strategies and so on are applicable in almost all stock markets in the world. Hence, whether you are from China, India, England, Singapore and so on, these investment educational materials on stocks and options shall be useful to you. As always, please do read the disclaimer too! One more point to share is that, the e-seminar on

Entry Filed under: US Stocks, Macro, Stocks, Singapore