Today has also been one very interesting day for the financial markets.
With time running out for AIG's vault, it seems like all eyes are looking at the Fed to provide a bridging loan to lend the company a helping hand. Additionally, if rumours are right, WAMU may soon get off the radar screen if JPM has interest in them.
Looking at the market on the macro level, we have witnessed the more than $600B in share value that got worthless or disappeared in the financial and banking sector, and historically, equity markets on average drops 26% during a recession, where now S&P 500 has already reached 23%. In addition, current dividend yield of some stocks have begun to surpass yields from Treasury Bills products. One more evidence is taken from Thomas J. Lee, JPM Chief US Equity Strategist in New York, net cash balances in margin accounts at NYSE member firms are highest in at least 50 years, citing $932B has poured into money fund since Aug 2007.
So do you think this could be a possible turn?
For my personal preference, I will be keeping a good eye on medical, pharmaceutical and related industries to start with. For some reason, the value of such stocks tend to get undervalued after financial stocks get a big hitting, as the value of such stocks do get affected by the changes of sentiment of the stock market in general.
Next, I will be back on the saddle to continue market momentum trading, as irrational moves in the market could have been greatly reduced, and therefore making it easier for momentum trades to be made on the FX (specifically GBPJPY/ EURJPY in Asia, and EurUsd/GbpUsd in Europe) and futures markets.
Tell me your views.
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