SET Index : If you’re long, sell or regret.

Let us not waste time here. The floods are a complete disaster for the country, andEuropeand the insane Fed are a total disaster on the international stage. Add to that brewing issues re the west vs.Syria(readIran) and we have a winter of (bad) surprises ahead.

Please understand, the recent strength in stocks was a bearish bounce, A dead cat rebound, a trap for fools, for idiots, for those who never learn. The market is going down, of that we are as sure now as we were months ago when we called a top on the SET in these pages….and subsequently buggered off on a long and much enjoyed vacation.

 

In terms of levels, there will be a pullback to 920-940 before the end of the year, with a couple of caveats. The ECB goes mad, follows the Fed and prints with abandon. Or maybe the Fed buys ESEF bonds and a 3-6 month window of calm is bought for the markets. Indeed, 920 or so is an easy target, with 870-890 the more aggressive target. but very likely in our opinion.

 

If things go badly we could see 820, 800 or a tad below in early to mid Q1 2012 (oh how we hope so), and if there is a real black swan event, 750-780 will be in sight. (Black swans…. How about a US-Israel attack onIranand subsequent turmoil in the Straits of Hormuz? Or how about a US Russian standoff overSyria? Or better still, a disorderly default inEurope, ….a CDS default triggered elsewhere on the spoilt continent? A meltdown in theUK….a run on the Yen?

 

Hoonthai enjoys a good old QE ?100? inspired rally as much as anyone, but right now we are looking and hoping for a decent pullback from which to buy, because before long the west will come up with something to instill a huge rally, albeit likely to consist of smoke, mirrors, lies, debt on debt on debt, leverage up the yingyang and plenty of hopium.

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