Oct 2020 Market Update

Oct 2020 Market Update

1)     SPX index – pullback and corrective phase, before targeting a new high

2)     Industry comparison (ThinkorSwim): Tech stocks down, cyclical industry including real estate counters mostly up

3)     ETFs comparison: SPY vs QQQ vs DIA

a.      SPY outperform DIA, SPY have more tech companies, DIA have financial/traditional industry is underperforming now

b.      Long term should be similar

4)     Shanghai Composite Index (SMComp): outperforming USA with 5.51% return from Jan-Oct 2020) as USA is only up 4%

a.      ASHR ETF

5)     Hang Seng Index (HSI): down 16.78%

a.      HSBC/developers all going down

b.      3033 ETF (track Hang Seng technology index or NASDAQ of the East): JD, Alibaba still doing well in HK

6)     Singapore – Straits Time Index (STI): underperforming @ -22.41%

a.      Many cyclical companies (banks, shipping, real estate), 40% comes from 3 SG bank

b.      Recent scandals on illicit money flow for banks

7)     VIX: fear index, affected by options

a.      More option players, higher VIX

b.      Average is 17, now it stays around 23-30

c.      ‘Buy call’ option spreads on this index

d.      Market price drop, volatility goes up, as election comes, VIX can go up due to higher uncertainty

8)     Most important, benchmark own Result against SPY: beat SPY – when market is down, LESS DOWN, when market is up, MORE UP

9)     After election, market tend to rally:

a.      If Trump (existing president) wins, market rally higher up

b.      If Biden (new president) wins, market rally high but due to ‘uncertainty’, not as high

c.      But market tend to rally till the end