Market weakness in October

Last Friday, US market dropped again. The new set of numbers do not look good, especially unemployment rate rose. This could be the trigger point to a mild correction which bring all the market back to ground. The market rebounded from Mar low base on the green shoot theory, but economy recovery would not be straight line most of the time.

US numbers
The numbers do not look good. After the financial and subprime crisis, the American is unlikely to go back to old way of spending. Now thrift is the in thing among the people. This would means the demand is unlikely to pick up fast enough for us to return to strong growth. Other countries need to participate more in the consumption to drive growth.

V or W shape of recovery
The stock market looks like recovering in V shape but many suspect it would be W instead. That means the current market euphoria is on the basis on growth coming back next year. Some say this is just inventory restocking, where demand comes from under supply. After the restocking, the demand is unlikely to catch up again.

Local stock market
Many think that the market has run far ahead. Due to the huge cash waiting at the sideline, we saw a continuous strength of equity. You see, market is all about human psychology. If more and more people believe that the market is overvalued, they would find excuse to take profit and wait for better entry point. This couple with the traditional weak October sentiment, we could see some healthy correction.

I see the crisis is over but the growth is going to be slow in coming years. Depends on the correction, and oppotunity, there would be some bargain that worth the risk.