I had stopped trading as the portfolio had a margin call due to the recent market volatility. I had left the long USD/JPY position open, the yen surged on tremendous selling pressure by investors and the rest is history. The portfolio had a margin call which I did not see coming. It is times like these I learn to pay more attention to risk management. I had never expected the market to turn lower so quickly. What I felt was cheap in the equity market seemed to have gotten cheaper - I clearly overlooked how volatile the market could be.

I would have to spend some time 'raising capital' so that I can have enough deep pockets for the next round. I would need to build sufficient capital as well as my confidence once again.

I feel that the equity market is nearing a bottom soon, but not until we see another round of bears versus bulls. I suspect volatility might remain high. There have been large price moves in the Asian markets. Volumes are low but price movements are clearly high and biased to the upside. I think this is the "new president" effect. Obama's victory seems to signal that the a new dawn is approaching and the market likes it. The market is behaving now as if we are going to see a recovery in the next two quarters. I am still waiting for more bouts of volatility before I touch equities.

Commodities on the other hand, look more attractive than equities. It seems that they appear to have more holding power. Prices are still sticky and judging from the past seasons, commodity companies are the only ones that are reporting profits. The rest are just taking the heat from a slowing economy. SIA profits are down in double digits, DBS also down and cutting jobs, OCBC down, UOB almost unscathed. There are two things moving forward, either the market is comfortable with the current commodity price level and we move forward from here, or we see another round of slaughtering and commodity prices fall lower.

The US Dollar is moving in a range, looking for a direction. On the one hand, we see paired currencies weakening with generous cuts from central banks; The US dollar strength is hurting some of the Asian company reportings as we have been so comfortble being exporting countries and reliant on Western domestic demand. Now, the US dollar is stronger and it seems that our exports are looking cheaper to the West but they are not consuming because they are slowing down. What I think needs to happen is that Asian countries unify together and build the base and lead the global economy to the next chapter. Asian currencies have to appreciate, Asian domesitc demand has to be built and more manufacturing jobs have to be exported to the Western allies. But this will take a long while to be established.

Trade Recommendation : Long EUR/USD for the short term