The Market SPEAKS!

Yes, the answer that we have been waiting for whole week is revealed at last! The market has decided to go UP! The up day on Friday has broken the high of 17 Dec and turned the pullback in the reaction rally around. This has totally broken the downtrend and begun a new bull trend in accordance to the Dow Theory! All these happened in conjunction with better earnings, higher consumer spending and the VIX coming below 20 for the first time since 18 Oct.

In fact, investors are fast coming to the realization that the so-called credit crunch is very much contained within the residential property market only and corporate loan default rate remains a low 0.9%, which is extremely low for recessionary times. In a real recession, corporate loan default was as high as 4.5%! It does seem like companies are not feeling any of the impact that the banking guys are just yet. But if banks are feeling a liquidity crunch, wouldn't that affect company growth? Not if the banks get additional help quickly and they have! Sovereign wealth funds from Abu Dhabi, China and Singapore have stepped in to provide liquidity to major banks in order to tide through this crisis and I am sure with today's globalization, any recessionary pressure would be moderate. Globalization as well as experience learnt through the past few recessions have taught leaders how to avoid or cushion the impact of any recessions and it seem to be the case so far.

Well, there are 5 more trading days before the end of the year and plenty of time for Santa Claus to do his stuff! Enjoy the Ride and the Holiday! :)