There are different opinions as to whether the stock market has recovered. Many think the worst has over. Technical bull market is back (20% bounce from bottom).
Here is a different perspective through the real life observations.
1. More people are interested to go in stock market now than ever. One stock brokerage firm has the statistic showing new account openings are 100% more than previous month, and 64% of them are new players. This more or less explains the recent unusual high market volume. People are diverted to stock market during MCO.
2. People who are not new to the market, are not despaired or pessimistic. In fact they hold plenty of cash waiting excitedly to rush in. Some of them are even interested on opening margin account. Perhaps new margin account opening is also shooting up.
3. Most of the stocks are not undervalued enough. The earnings growth is definitely gone for at least this year, yet the current KLCI PE still stands at about 15 with worsen earning outlook. Downside risk is apparent. People seem to neglect the fundamental of economy and focus only on the stock price.
4. Retailors are increasing magnitude of buying, while foreign and local institutions continue to sell. Fund managers are doing portfolio adjustment to prepare for withdrawal.
5. All the stimulus packages introduced in the world are meant to cushion the imminent economy crisis we are facing, but people perceive it as economy recovery and growth is imminent, so as stocks.
6. People around us are either losing income stream, jobless, suffering pay cut, having problems with all kinds of debts, worry about retrenchment etc. They decided to spend less in anticipation economy will be bad. Yet when talking about buying stocks, many said the market is in good bargain, wanna hantam in contrary with their view in the economy.
7. The supposed scenario of collapse in the US market is not seen yet because, it is largely distorted by unlimited QE and all the subsidy measures. The bounce of stock market does not reflect the true economy scenario, but because of cheap and hot money overflow. These hot money move around very quickly. They are meant to be speculative/opportunistic, not intended to stay long. The stock price is fragile in this sense.
8. The US president admitted he is acting as a cheerleader. He is not supposed to create fear and chaos to the country and market. This means people should not listen to what he has to cheer, but to observe the coming earning season and the key economy indicators, and let the data speaks by itself.
From these observations, stock market seems to be detached from the economy entity. It may sustain longer than expected, but eventually it will reflect the true economy situation.
Brace for long battle. Patience and discipline will pay.