Bill Wermine - expensive sifu, cost me a lot in tuition fees :(

Dear Traders,



My conclusions for 2010 are:



Long term interest rates in most all countries are headed higher. The shape of the yield curve in the US is the steepest in over 30 years. This is a recovery signal. But it is an uncertain recovery like a sand castle on the beach. The big Tsunami wave can wipe away the castle at any time.



By the 2nd quarter central banks around the world will be forced to exit their ultra easy monetary policies.



Bond prices in most markets will tumble- this is true for government bonds as well as corporate bonds.



As bond prices drop stocks will move ahead. Commodities, crude oil, gold will rise as inflation increases.



At some point when interest rates on bonds exceed dividends on stocks the Dow will experience a steep correction and pull down markets world wide.



Gold will find strong support at USD 1075 and should move back above 1250 in the weeks ahead. Shrinking mining supply as well as central bank demand will be supportive even in the face of higher interest rates.



Currencies will remain stable as central banks world wide act in concert to raise rates. The AUD should outperform the USD and most other currencies as Australia will raise their interest rates faster than in the US . Australia is in much better financial condition than Europe / the UK or the US and has a vast supply of commodities- real assets which China requires for their development.



Continue to deal in high grade blue chip dividend paying Malaysia shares and precious metals such as Am Precious metals but keep an eye out for the exit door.



As the US continues to print vast quantities of paper money with nothing tangible to back it up- much of this liquidity will find its way into stocks and gold. - for the time being -but at some point the piper must be paid and there will be a collapse.



I wonder who is going to pay for the new 30 + million US citizens with no health insurance who are now promissed free medical care by Obama? or who is going to bail out the bankrupt states like California or continue to fund wars in Afganistan and Iraq, mortgage bailouts for those who bought homes but do not have the means to service their loans ?



I was reading the history of the Roman empire. It collapsed mainly because the politicians debased the currency, spent way beyond their means, waged expensive wars that ultimately bankrupted the Roman empire. I think the politicians in America are going down the same road. Especially Obama and his band of socialists.



I hope all of you had a pleasant holiday and Merry Christmas and are recharged for 2010.

Bill


Dear Traders,

Expect a quiet KLSE to the end of the year. Volume is drying up, institutions are closing their books. Avoid new positions. Keep your quality dividend shares.

I am raising more cash in my managed accounts to take advantage of any steep corrections in January.

I expect a steep new year correction in the S & P/ Dow . PE ratios in the major US markets are at 22 times earnings, far above the historical average of 15. The US Dollar carry trade is unwinding which will force margin call selling in stocks worldwide.

Malaysia is well insulated as foreign ownership of our quality shares which we hold in our managed portfolios is low. Foreign funds can not sell what they do not own. They are also forbidden by exchange rules to short sell.

Gold has had a steep fall and is finding support. Once the day traders/ thinly capitalized players and late comers to the party are washed out expect gold to recover. The same is true for the AUD. Support is at 86.

The big picture has not changed. My bet is inflation, low interest rates, more social programs, higher taxes, continued high un employment, house defaults, bankruptcies, bank failures in the US. Once the short covering is over expect the USD to continue its downtrend.

For US market Ameritrade accounts you may short sell the EZU ETF. This is a basket of European shares. IT has a mushroom top- very bearish.

At our US market session Tuesday 730 PM at my office will short this ETF. We still have few seats for this session and let me know if you want to know how to trade US ETFs

Risk 10 % on entry. Target 20 % profit.

Have a good week
Bill

Dear Traders,

We just completed our 3 day chart reading program and would like to report that the new syllabus was well received. We focused entirely on price and volume trading. We adapted the Wyckoff charting method to the Malaysian market .

Richard Wyckoff was a very wealthy trader in the early 1900s and his legacy to the world was his legendary The Richard D Wyckoff Course in Stock Market Science and Technique. This course is still offered today by the Sock Market Institute in Arizona, USA.

This course has been the foundation for many market wizards and professional smart money traders who apply his methods in today's markets. George Soros was influenced by his methods and the Wyckoff no demand pattern was his entry into the British Pound short sale which earned him a few billion dollars in 1998.

30 years ago I took his course and it has enabled me to make a living from the markets without having to depend on others for my living. I am not a market wizard, just an ordinary trader and his methods can benefit any serious motivated market student who wishes to gain financial independence.

I look forward to the success of the new batch of Wycoff traders who graduated from our program Monday.

We intend to repeat this program to a limited group of graduates in my office again in the near future to fine tune the syllabus. There will be only a nominal charge for the new set of notes.

Next week, God willing will get out my regular market report. It looks likes like quiet trading to the end of the year as instututions are closing their books going into year end. Avoid taking positions in currencies as we may be subject to extreme moves due to lower year end volumes. Gold is still well supported-

Have a good week
Bill