Believe it or not, US 4-week Treasure Bill dropped to 0% on 10th December 2008 and on 11th December recorded a Negative 0.01%. Investment Fund is willing to buy the 4-week bill and lose 0.01% of the fund immediately. If this is not a bubble, what can it be. I still remember in 1996 when KLSE was at its peak, there was no stock below Rm 2.00, and some investor bought Rm 1.00 face value Non-convertible Redeemable Loan Stock at Rm 1.20. As an amateur technician in stock investment, I don't really understand the implication of this bubble. My observation is, in the past whenever the funds switched out of stock, they moved into bond, that is why whenever Dow goes down, bond price goes up and bond yield goes down. Based on the same logic, does it means that if the fund switches out of treasury bills, it will move into the stock ? Lately the Dow is quite well behaved technically. Refer to the chart above from Yahoo, if it drops to 8300 early next week and then moves up strongly with high volume exceeding 8 billion, chances is very very high that the 7,392.27 intraday low on 21st November 2008 is the end of wave A (that dropped from 14,279.96 on 11th October 2007 to 7,392.27 on 21st November 2008. 48% drop in 13 months). Assuming 50% up for Wave B, it should move from 7,392.27 to 11,100 by October 2009. I hope it can be confirmed by end of next week.
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