The rally which began from 4 Oct 2011 looks very stretched. However, the S&P500 Index has just surpassed Apr 2011's high. It took almost 12 months to surpass the 1,380 level seen back in Apr 2011. The corrections are getting more violent as the bull run goes into the fourth year. Back in 2010, where the first big correction occurred, it took only 6 months to surpass April 2010's high.
This current rally will probably correct a little bit in March or April, to a tune of 5 - 15% before resuming it's upswing. Then around the second half of 2012, we could see the rally being increasingly volatile.
The size of the QE from Europe is around EUR 1 trillion. From UK and Japan, it's around USD500 billion. This is a bigger QE than the one started by Obama back in Nov 2008. I think we could be surprised by the strength of the rally, which could last until Nov 2012.
It's very difficult to predict beyond 3 months. I am not in the business of forecasting too much. Most analysts fail to forecast accurately anyway. But I'll be increasingly cautious as the rally progresses, constantly dialing down risk from high beta stocks to low beta, high dividend ones, and the low beta stocks / funds, I'll move them to high yield bond funds. For existing high yield bond funds, I'll move them to alternatives.
My asset allocation is now 40% equities, 10% commodities / gold, 30% high yield bonds and 20% alternatives.
The real estate scene is still thriving in Singapore but watch out for more measures from the government to control it. 2013 looks like the year of reckoning for properties and stocks. It could be the perfect storm. We shall see.
