The upside is limited

The recent turmoil in the market has turned off retail investors. I do not see sideline money coming to the equity market. The market is mainly traded by hedge funds and traders so it is more technical based. The cash level in mutual funds is very low right now. S&P will trade between 1020 to 1120. TSX will trade between 10800 to 11800.

BP's impact on the market has been under-appreciated. It is quite possible that BP will cut dividends and its bonds will be downgraded. The liability can run to tens of billions dollars. There is a slight chance that BP can file chapter 11 to limit its liability.

the market how low can oil go

In the beginning of this year, my prediction for crude oil is between 60-85. I have not changed my position yet. The reason is simple, the economy for offshore oil and oil sand will disappear when oil is below 60. So you will not have long period time for oil trade below 60. The fundamental change may happen when electric cars become viable.

The market is in panic and will last for a while. There are facts and noises in the market. Facts: Global economy will be slower than expected because of European situation; China property is cooling down which means the base metal prices is levelling off; U.S real estate market has stabilized and will improve because of the low price and low martgage rates; Low oil price will benefit consumers; Federal reserve is very dovish; High U.S exchange rate will decrease corporate earning for global companies. Noises: potential breakup of Euro (it is not going to happen any time soon); Big U.S. banks have lots of stress due to European debt (most big Bank's balance sheet are much stronger than a year ago and will make lots of money because of the yield curve).

BP's liability

If you still own BP, you should think again. The liability will exceed 10 billion dollar. the 75 million cap is irrelevant because there are safety issues violations. The dividend is in danger. I would not touch it until the spill is stopped and you have a clear picture of the liability.

shopping list

Today the market is in free fall and may give you some opportunities. If you want to put orders in, please put them way down of the market. Also do some switches.
In Canada:
BCE should be sold over 31. List of buy: CNR @55. TA@19.20; HSE@24.50; TCK.B@29.80; POT@98.

In U.S.
BAC@15; V@68; INTC@19.80; CSCO@22; CHL@44 and IBM@120.

a rebound is close

The market is close to 10% correction and a rebound is likely. I bought 100 shares of TCK.B @31.50 C$ (around 30 U$ for TCK). My target is 34 C$. I also put an order in for 100 POT @C$101 or U$96.

When the market bounce, it should be sold to.

summary for May18, 2010

The market wanted to go lower. So it is a good time to establish some positions. I have not got the shares I wanted yesterday. But I will continue to put the same order in.

I have not update my portfolio for a while. This is the updates

Portfoilio 1 (Cash, 400 INTC, 200 CYB, 200 BRCD and 1000 C): U$113,369
Portfolio 2 (Cash, 400 HSE and 100 TD): C$81925

the market is in correction and build some positions

The market is in serious correction for the first time in a year. I will slowly to build some positions. I will put an order for 100 shares of TCK.B for 31.5 or TCK (in U.S.) for 30.50. 100 shares of POT at 100 C$ or 97 U$. 200 BAC at 15.