Big Monday Sell-Off, I do not think so. In fact we may see some real strength in the markets in Asia Monday as bargain hunters and QE3 speculators start to pick up bargains.

All eyes this week will be on the Federal Reserve’s annual meeting. It was at this meeting last year that Fed chairman Ben Bernanke unveiled QE2, its second round of money printing, in a bid to boost the US economy. Sharemarkets soared following last year’s announcement.

US 10-year treasury bonds remained well sought on Friday evening, yielding 2.1 per cent – just up from their record low of 2 per cent on Thursday but almost 0.5 percentage points below where they stood when ratings agency Standard & Poor’s historically downgraded US sovereign debt a fortnight ago, a move that fundamentally should have caused their yields to rise.

The fact that this did not happen is an indication that the market is out of alignment. The selling last week was an overreaction, earnings have been sound and outlooks reduced mostly due to the uncertainty created by politicians in the USA and Europe.

Australia is set to be a winner on Monday at open and set the tone for the World, Gold hit a record $US1881 an ounce on Friday, which is expected to help the Australian gold sector, while the Australian dollar settled around $US1.04 as the USD fell to a record low against the Japanese yen. There is a real chance now that gold could test $US2000 an ounce in coming weeks.

The market watchers predict this should help local stocks brush off Friday’s 1.5 per cent slide in the US S&P500 and falls of around 1 to 2 per cent in Europe, particularly given the weak local performance of shares at the end of last week.

We are pleased to report our clients have continued to make money throughout recent market turmoil by harnessing the sophisticated, diversified investments that we offer.

Certain investment vehicles, such as hedge funds, can thrive at times of market stress because they are able to use risk management tools such as derivatives and make short-selling sales that make money when an asset price falls.

The historic swings in the U.S. stock market over the past two weeks have investors struggling to figure out where equities may be headed next. Only one thing seems clear: The volatility is far from over, so if you are a buy and hold trader, buy only on heavy falls, buy small and leave room to average down your position.

However, with the S&P 500 down 17.6 percent from its 2011 high, we think a bottom could be near and bargain hunters could trigger at least a momentary bout of buying.

The situation in Europe has been dictating much of the market’s recent movement. On Tuesday, shares fell after a meeting between the heads of France and Germany failed to squelch fears about euro-zone leaders’ ability to contain the region’s debt issues, which could impact global growth and the profit outlooks of U.S. banks.

Market participants will also be looking ahead to comments from Federal Reserve Chairman Ben Bernanke at the central bank’s annual meeting in Jackson Hole, Wyoming, on Friday.

The Fed recently pledged to keep interest rates “exceptionally low … at least through mid-2013,” news that sparked a short-lived rally, suggesting that there may be little new information coming out of the Jackson Hole meeting that could move markets.

The S&P 500 fell 4.7 percent this week, extending losses of 12.4 percent over the previous three weeks, its worst streak of that length in 2-1/2 years.

The CBOE Volatility Index, also known as the VIX, is up 20 percent this week.

Next week, investors will have plenty of U.S. economic indicators to watch, including the release of data on new home sales data, durable goods orders, consumer sentiment and gross domestic product. Should the data follow the recent trend of weak reports, which have contributed to the growing sense that growth will be muted, it could cause further selling, this may trigger a strong bull run and would represent the best of all possible buying opportunities.

Shayne Heffernan

Shayne Heffernan oversees the management of funds for institutions and high net worth individuals.

Shayne Heffernan holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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Petchada Kingwattanakul

Business Development Director

Heffernan Capital Management

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Posted by Shayne Heffernan on Aug 20th, 2011and filed underAnalysis, Asia, BRIC, Commodities, Companies, Currencies, Economics, Emerging Markets, Equities, Equities, Europe, Foreign Exchange, Heffernan Capital Management, Hot Topic, In Depth, Latest News, Limelight, Market, Market News, Markets, News & Events, Research, Shayne Heffernan, Special Reports, The Hot List, Trading, USA, World News.You can follow any responses to this entry through theRSS 2.0You can leave a response by filling following comment form or trackback to this entry from your site