When Marc Faber speaks, I listen. Below is a hyperlink to the interview. He said the following:
1. Emerging Market stocks may fall 20 - 30%. They are overbought and failed to break a new high.
2. US equities will outperform for the next 2 - 3 months. They may not rise but they will fall only 10% max.
3. Take profit from mining sectors which are overbought.
4. Markets are signalling something wrong with the Chinese economy because it is not rising.
5. Still bullish on gold, but likely to fall 20% soon.
Fund managers, hedge fund managers have a big say in where markets head to. Their entries and exits move markets because of their deep pockets.
So far, only the VIX has gone back to 20. It hasn't broken past Nov 2010's high of 24. Other risk indicators are edging up, but they are still within the downtrend. They have not broken past their resistances. Besides, the QE2 is still in operation.
FYI, Indonesia, China, India, Latin America and Middle East have all broken below their supports. I am only bullish on China, Latin America and Middle East, but not the rest.
I will be on the edge of my seat this week, deciding which way the wind blows. Don't misunderstand, I'm still bullish, but I may decide to hedge my portfolio by locking in all my profits or buying a derivative to hedge myself.
http://www.bloomberg.com/video/66163222/
