[caption id="attachment_1466" align="alignright" width="192" caption="Photo by mudpig"][/caption] I was not affected by the stock market rally in December because volumes were thin and many investors were away for the holidays. But the strength of the rally at the start of 2009 was powerful and after three market days.....I was beginning to question my own rationale that markets still had one more leg down to the 1200 level.After serious thought and ahead of my Channel News Asia interview this morning, I decided that I just couldnt be bullish now as there is not one shred of positive news or even news that the macro economic situation had bottomed. The two intra day charts above show how the STI and Hang Seng suddenly became bearish after lunch.  There was no obvious reason for this.....US futures were marginally down.  There was also no need for such a sharp sell off if it was just normal profit taking from the strong gains over the last few days.  I also noticed very large sell volumes in Capitaland and other property counters without any significant marry trades which could signal some stale bull institutional selling. The only blue chip that bucked this trend was DBS....but lets see how it performs once the rights issue is over. I am still of the view that cyclical stocks such as banks, property, airlines will under perform for the next six to nine months until we see signs of the global economy bottoming. I also noticed today that there was large volumes on the penny caps meaning that traders were back...with palm oil issues such as Golden Agri riding the trend of a stronger crude price. Please remember that this rise in crude is not demand / supply driven but rather partly speculative/preemptive because of the heightened tension in the Middle East. I think crude would hover some where between the US$40-50 level once the tension in the Middle East subsides - this is expected to occur around the time of Obama's investiture. I think sentiment remains negative but you can always trade the ranges if you follow the markets actively especially the more liquid counters. If not this rally is a good time to reduce holdings ahead of what I expect will be a difficult and negative earnings reporting season. Source: NRA Capital - Kevin’s Blog