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Key sectors to watch out for in the stock market

Legacy Phuket Gazette

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PHUKET: May to October is often a season of choppy sideways action. The old adage, ‘Sell in May and go away,’ already appears to be holding true as over the last three weeks, US markets and global markets have pulled back from overhead resistance levels on their technical charts.

The Nasdaq index in particular is looking bad as tech, semiconductor and biotech stocks largely fail to rally, while the Dow Jones along with many sectors appear to be breaking down.

Since July 2014, the all-important S&P 500 index has largely been in a choppy sideways trading range; roughly between the 1,800 and 2,100 levels, going basically nowhere for investors.

This means the S&P 500 is neither in a bull nor a bear market. So until the index breaks out above the 2,100 level, or plunges back below the 1,800 support level, we can only speculate on the direction the market will go, or whether another recession is lurking around the corner.

Here are several key sector or market indices to watch closely to see which direction the markets and the economy might be heading in.

The PowerShares S&P 500 High Beta ETF (NYSEARCA: SPHB), which indicates whether investors are taking risks by investing in growth stocks, was in a good rally. However, the SPHB has fallen off since late April, indicating investors are not taking risks right now.

The iShares NASDAQ Biotechnology Index ETF (NASDAQ: IBB) briefly rallied only to fall back to a support level. If IBB falls through that support level, it’s not looking good for biotech, and it won’t help the biotech-ladened Nasdaq’s performance.

The SPDR S&P Retail ETF (NYSEARCA:XRT) bottomed in January/February, then rallied, only to hit resistance before getting slaughtered in May. This is not something you want to see on a bull market advance and there is no sign that XRT will breakout again.

Of course, the shift from brick-and-mortar retail to eCommerce – also leveling the playing field for smaller players – is partially to blame for XRT’s performance.

The iShares Dow Jones Transportation Average ETF (NYSEARCA:IYT) also rallied, but that rally has since rolled over and it looks like IYT could continue to head lower.

As with retail, watching the transportation index roll over is not a good thing to see. The i-Shares MSCI Emerging Markets Index ETF (NYSEARCA: EEM) tried to rally.

It did break out above a key level, but recently fell back down below that level.

That’s not a good sign for the global economy nor for developed countries or many large cap stocks that rely on trade with or have a significant presence in emerging markets.

The SPDR STOXX Europe 50 ETFs (NYSEARCA: FEU) performance resembles that of emerging markets. However, Europe faces even more uncertainty with the coming BREXIT vote, the ever-present threat of terrorism and the ongoing refugee crisis that is fueling political resentment against European leaders.

Right now, I am neither bearish nor bullish about the market. However, without positive action in the above key sectors or markets, the overall market will have a hard time moving higher; meaning cash is the safest place to be for risk-adverse investors.

The problem is predicting what will happen as the increasingly unpredictable US presidential elections are still six months away while the FED could come up with yet another quantitative easing to blast the markets.

What we do know for sure is if key sector indices keep breaking down, we could be in for another nasty recession as the overall market, from a technical standpoint, is starting to look more and more like the market in 2007, just before everything crashed the following year.

Keep an open mind as we enter the summer months and watch the price action of the these and the major US markets.

Don Freeman, BSME is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Call for a free portfolio review. Don can be reached at 089-970 5795 or email: freemancapital@gmail.com.

— Don Freeman

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

The Thaiger

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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Domestic air passenger numbers double those of January

Maya Taylor

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Domestic air passenger numbers double those of January | The Thaiger
PHOTO: Vietjet

Passenger numbers on domestic flights within Thailand have doubled within a month, rising from 4,000 in January to over 10,000 this month. Having nearly recovered to pre-pandemic levels, domestic travel plummeted once more when Covid-19 resurfaced late last year.

Apirat Chaiwongnoi from the Department of Airports says 15 of Thailand’s 29 airports are now operating domestic flights, with more expected to follow. He believes the aviation sector will continue to recover further in the coming 6 months, bolstered by the national vaccine rollout.

Around 120 domestic flights a day are now operating, which is twice the number that were operating at the lowest point in the crisis. Prior to the resurgence of the virus in December, domestic passenger numbers had recovered to 30,000 – 40,000 a day, around 80% of pre-pandemic numbers.

The DoA says airports must continue to adhere to the Covid-19 hygiene measures put in place by the Health Ministry and the Civil Aviation Authority of Thailand.

SOURCE: Bangkok Post

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Coronavirus (Covid-19)

Samut Sakhon’s shrimp market to remain closed until February 15

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Samut Sakhon’s shrimp market to remain closed until February 15 | The Thaiger
PHOTO: Kom Chad Luek

Samut Sakhon’s Central Shrimp Market, the epicentre of Thailand’s recent wave of Covid-19, will remain closed until February 15. The market can reopen once the overall hygiene situation at the market and surrounding area has improved, according to the province’s disease control committee.

Local officials say the shrimp market needs to remain closed until the market structure and nearby residential facilities are inspected. People who violate the order face up to a year in prison and a fine up to 100,000 baht.

More than 12,000 people in the province have tested positive for Covid-19. The increasing number of infections is a result from the active case finding to contain the spread of the virus.

SOURCE: Thai PBS World | Thairath Online

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