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“It’s bubble everywhere” the Wall Street legendary investor Jeremy Grantham set the alarm on the financial market in Business Time on the 5th May 2007.
Is the bubble going to burst soon?
Since 2006 the Bing Xu year, the fire and earth related industries gained strength. Water related industries such as marine, logistics, transportation and communication were profitable since fire is the wealth for these industries. Property, construction, banking, insurance and medical industries belong to the earth industry and trended steadily. Fire industries such as old economy stocks, advertising and media, software and hotels did extremely well. Anyone who had invested in these areas will profit in 2007. Wood industries such as agriculture will only gain strength during the last quarter of the year when water is the element to strengthen wood.
2007, Ding Hai year, is a year strong in fire, earth and wood. Industries such as earth, fire and water continue to gain strength in 2007 especially earth related industries.
The Property market remains the most active when prices are move toward record-breaking levels. This is simply due to the Fire element which is present to lend support to earth while the water element from the boar is the wealth element for the earth industry. Equity markets, oil, power plants, hospitality, airlines, belong to the fire element which will do extremely well this year especially during the first half of the year.
The month of February brought strength to the wood and fire industry. The market gained strength until 27 Feb when the water element in March set in. This caused a mini correction to take place for about 2 weeks before the market started to gain strength again. Oil prices have been moving towards the uptrend from the second week of March when wood give strength to this fire industry. Oil prices will continue to rally from my point of view. There is strength from the elements to support fire during the spring and summer. This coming summer would likely bring Fire to a fanatic high. The oil industry and the equity markets should reach a new high especially in the month of June. Anyone holding a position from the previous month is expected to benefit from this impending Bull Run. The water related industry should see great profits during this period since fire is the wealth element for the water industry. The industries that are not likely to perform well would be the metal and wood industries. Gold prices are likely to correct in the month of June. Wood industry is likely to suffer the most since wood die at the peak of summer. This can be also due to natural disasters i.e. drought or forest fires. I can imagine how volatile the market is going to be for this summer. ( May through to July )
The energy will trend towards the earth and metal elements come autumn. Given the possibility for the market to move to new highs during the month of June, it is likely that the market will go into a huge correction in August. This correction will affect the earth and fire industries. I am of the view that the property bubble will burst during this period.
The year 2002 had the same combination of elements in both the year and months. The property market then went into a slump until April 2003 when fire was back in action again.
Will we see the similar trend?
This will very much depend on June’s market performance. The property market worldwide has gained significant strength and prices have been escalating and still are to unimaginable highs. It is not surprising therefore that the impending August correction can impact the whole industry significantly.
The hidden element in year 2002 was a wood element which is a controlling element for earth, hence the weakening of the earth industry. This year the hidden element is an earth element which will lend support to the earth industry. This is probably the saving grace which hopefully will bring the property market to a softer landing.
The seasonal energy usually sets in about a week earlier than the actual start of the season, hence the last week of July to first week of August will be a vulnerable period. Should there be a contributory condition to weaken the equity market, the correction is timed to take place then. It is thus prudent to consider liquidating your positions during the first to second week of July.
The winter period from November onwards will allow the wood industry to gain strength. This will also be a period for profits and wealth for the earth industry such as the bonds market or any other slow moving markets.
The above are my personal views and opinion. Please use this information with care.
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