Friday, September 17, 2010

Investors Start to Move Into Stock Equity Market, Seeing Support

The stock equity market moves up gradually and finishes higher than last week. The trading volume is also higher as some investors move some capital from bond to stock equity. The inflow of capital is still relatively small and does not push the market significantly higher. Unlike the last rally from February to March, individual investors turn optimistic since recent bottom. Therefore it is suspected that this rally can continue for several months whereas individual investors mostly stay on the sideline during February to March.

It is still optimistic on stock equity market. However, short term volatility presents risk to the investment portfolio which is based on speculative stock trading. The portfolio is still fully invested in the stock portion, but with leveraged ETFs holding slightly bearish. The latter serves as hedging to the stock holding in case the market may swing against the holding stocks.

Market makers may not be patient to see the market flat for extended time. On the other hand, retail investors do not have strong confidence in stock equity and may flee from stock market if they perceive unfavorable sign of economy again. There is much uncertainty of market direction under current condition of participants.

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