After 6 "black candle" sessions, there is finally a white candle. Well, when there is a low, a little perk is what we can expect. The market closed on Friday at 2892.54, up 12.09 points from Thursday in a relatively weak upswing. Just when you think it is headed for doom, it crawls back after 330pm.
Right now, I would turn my sight on the US markets. The Singapore market is still reacting to how the US market has moved the night before.
The key word now is INFLATION. Such a simple concept that we often take for granted when all is fine and dandy. Here, I would like to take the opportunity of introducing Mosaic Theory. Mosaic Theory is an idea that people can piece together a picture of what is happening by putting together bits of random, seemingly unrelated information. By putting various sources of information together, here is my opinion of what is happening:
Commodity prices are obviously rising and this has not only driven inflation but also interest in the commodity market. Speculation can be expected to drive prices much higher if no intervention takes place for the short term. The root of all evil now is Oil. Oil is a necessity not only for energy purposes but also for transportation and cooking and it is what we eat too. If oil prices continue to skyrocket, which it probably will in the short term, there is no end to this inflation. Sounds like a non statement? Well, the thing is, I believe there is a price we are all willing to pay for oil and there is a conviction to increase production somehow and also a conviction of commercialising alternative sources of energy. Keeping this in mind, the high oil price will only make more expensive sources of energy more viable and put a stop to this frenzy soon.
That is easier said than done but the point is, the markets are not about to recover that quickly. This further supports my inclination to believe those that talk about a long recovery.
Good news for all. This also means that people have a longer time to seize opportunities when they come. We are all trying to spot a bottom but we don't have to. We just need the guts to tell ourselves to take the plunge in a bad market whether it is early or late and profit in a longer run.
Once again, this is an opinion. Readers, please feel free to challenge or question it. There have been no comments so far but it is welcome to spark a more lively platform.
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