Belated Santa Rally?

Just when the expected year-end (2008) window-dressing activity (or commonly known as Santa Rally) for global stock markets ended with much disappointment, global stock markets have surprisingly started the year with resolute intention! The chart below shows selective global market performance over the first 2 to 3 days of trading.


Having a sense of too good to be true, especially after so many false starts and suckers rally?

This may well be an exception! In my opinion, key global markets are possibly gearing up for a mini-rally this month, particularly after such a severe bear beating last year. So, there is a good chance we may experience more than just a technical rebound. After such a devastating and disappointing stock market performance in 2008, where key global markets plummeted from around 30% to more than 60%. The start of the year saw fund managers worldwide jostling to position their portfolios for the new year and the bombed out stocks worldwide, a scenario that has not happened for a very long time.

In Malaysia, the reasonably high average daily Bursa volume of about 700 million seem to support the notion too, suggesting there were plenty of buying support, on top of the more than 5% gain in 3 days.

However, bear in mind that this does not mean we have seen market bottom. It's just market "forces" at play at the moment.

While the US Government is doing what they possibly can to salvage the wreckage back home, the story in Asia may just be the beginning of a severe slowdown. Hence, the worst may have yet to happen in Asia. On a conservative note, economic recovery may be more realistic in 2010 than the second part of 2009.