TEAM, I am talking myself to take into cash most of my equity positions and/or placing stops at yesterday low. Maybe I regret this in the future. The main reason is that the NDX Price Action is just was too nice to the bulls for my risk appetite. I did not trade from 1997 to 1999 and I would not be surprised if we will see similar price action. Thus selling now might turn to be similar to selling in 1996. Time will tell.
If the party last a few months, I might be helpful to looking into Asia – Pacific.
China’s latest stock pop mixes the bitter with the sweet. Indexes have spiked to levels not seen since 2015, and leverage is rising, adding to fears of a crash. Weakness in shadow banking and property are pushing speculative funds into shares, but the rally is also underpinned by reforms accelerating a shift into equities.
As of Tuesday, the benchmark CSI300 index had gained over 14% over the past six consecutive trading days. The immediate drivers look dubious at first glance. Similar to the rally in 2015 – which blew up spectacularly – China’s housing market is soft. Property sales by value have fallen by more than one-tenth year-on-year in the first five months of 2020, Rhodium estimates. Lacklustre returns are likely pushing speculative funds into shares. At the same time, returns from once-popular wealth management products are falling as defaults rise. China’s $3 trillion trust industry, for example, has been hit by a wave of investor protests as firms miss payments. Most worryingly, just as in 2015, margin borrowing has started to rise rapidly, with retail traders egged on by bullish articles in state media.