The market attempted a rally even though the Fed was not as dovish as what it expected and that is a symptom of the excess liquidity floating in the system. It would take a major shock to remind everyone that there are risks out there and that one should not get carried away. We had that reminder last night with trade tensions escalating up one notch. Surely the narrative would now change for the downside... and this increases with the passage of time towards September if we do not have any positive trade news announced. That aside, everyone would now focus on the negatives and all the factors that were ignored prior may well come out and haunt the markets - things like slowing global growth, earnings recession, junk bond yields hitting negative, a depressed yield curve that points to increased chance of recession, a less dovish interest rate trajectory.... that said, I suspect that at some stage, the liquidity floating out there will find another excuse to buy up the markets and may well say that the case for the Fed to cut aggressively may well have strengthened. Just as I have deliberately not participated in the rally to the topside, I would not play this downside swing either. My preference is now for intraday trading until the Market resolves the excesses and my view of both market direction, technical, macro fundamentals and its structure gets aligned. The one play of a longer term in nature that I would engage in would be to add on to SG reits portfolio. (if we have attractive valuations.) The recent deliberation to increase the leverage allowed for S reits by MAS adds another positive.
