Correction in sight?

For the past month, we have seen massive rally for Asian markets like STI. The question on our minds now is if the rally is sustainable. It does seem that the current rally is building up to be a bubble as there are news that the 1st quarter earnings although better than expected are still not much to shout at. Note that earnings for financials and major companies as compared to the previous year are weaker on a year on year basis.

For today, the index has started to take a dip. If the dip continues based on this week trend, it would show that a correction is in effect where current prices would most likely be off between 15% to 20%. I would say that having a correction is healthy as it allows the economy to catch up, and the markets would then moderate towards recovery.

The waiting game

Awaiting news of the stress test... So far, the markets lacked a clear direction on whether should it go up or should it proceed south. For the past month, markets had quite a huge upswing and I'm actually waiting for a correction to happen to buy in for the next upswing. Although analysts and reports are out saying that recession is not yet over, I would say that the world economy generally lags behind the stock markets couple of months and with data showing a slowdown in the decline of unemployment and sales, it shows that the recovery of the stock markets should be in sight. As recovery happens, the world economy would also recover in the next 6 months.