USDCAD

The stock market turmoil continues this week with wild swings in Dow Jones Industrial Average becoming a daily event.

The CBOE Volatility Index went above 80 points this week, a sign of the fear that is gripping the market.

The current story in the market is oil price will not be able to stage a recovery since the global economy is slowing and demand of oil will drop. Next week we will see the OPEC meeting to discuss whether to cut oil production to stop the slide in oil price.

A direct impact of oil price decline is reflected in the Canadian currency. The USDCAD pair has been on an up move since early October. The USDCAD pair moved into “Bullish” phase on 30 Sep 08.

By being long in this trade, you are betting that USD will rise and CAD will fall. This scenario fits the current story in the market that USD will strengthen and as economy slows down, oil price will drop.

Singapore Market

What a difference a week makes. STI closed at 1948 points dropping a whopping 15% in a week.

The current down swing started on 4 Jun 08 when the index closed below its 50 day moving average after attempting to break out of the “Bearish” phase.

The situation seems to have spun out of control even after the US passed a USD $700 billion package that was supposed to bring relief to the financial system.

It is anybody’s guess whether the market will stage a fast or slow recovery. But as a trend investor, it is not advisable to buy into equity market at this point as the market is clearing stuck in bearish mode.

Hong Kong Market

The bailout package was finally approved by the US Congress on Friday. But it did not bring relief to the stock market.

The market sold down on the news and Dow closed down 157 points on Friday. There are still lots of fear in the market as indicated by CBOE Volatility Index. The market has moved from uncertainty of whether the bailout package will be approved to whether the bailout package can relieve the pain investors are experiencing.

The turmoil in the US market has caused pain to Hong Kong market as well. The phase chart is still showing a bearish bias.


The Hang Seng Index moved into Bearish mode on 26 May 08 and has stayed in Bearish phase for 90 trading days. It pays to trade with the trend.