Spend the last few months to take my very last actuarial exam, which I have attempted multiple times. (very frustrated). So after a 8-hour exam on last Thursday (9am - 6pm), it feels great to be back in writing about the market sentiment and my gut feel. (evidence based).
First up, a few updates on what happened recently.
- US debt ceiling will be reached and the government is undergoing debate on whether t o increase the ceiling again.
- QE2 is due to end on 30 June 2010. Fed still keeps a very accomodative monetary policy with interest rate at 0.0%.
- Chinese is still battling inflation with continued tightening of bank lending via raising interest rates and capital ratios.
- US economy still weak despite some slight improvement here and there
- Europe is still under constant reminder f what will happen if one member country having too much debt but without the ability to print money
- Commodities have taken a breather with 35% drop in silver from its all time high of $49.79 reached on April 24, 2011. Just above the its closing high of $49.45 on January 18, 1980.
So where to now...
The stock market sentiment tells that the bullish sentiment is not at an 'overbullish' condition. As a matter of fact, not evern close. (See chart below).
Based on that I will give the rally the benefit of the doubt because the sentiment does not point to a major market top.
Even though the global economy is still weak, this is no news to investors. Market is a discounting mechanism. Current information is broadly reflected in the price. What really drives the price is the deviation from expectations or the 'unexpected'.
For now, I will remain invested in equity.
