What will I do now?

Daryl Guppy, the trading guru is definite about the bullishness of the stock markets, especially of the Chinese stock market. However, he noted of a strong resistance area of around 2600 - 2660 on the SSE. If broken, however, it should propel all the way to 2,900 to 3,000. The SSE is now at 2,600.

Nouriel Roubini, very prominent economist, however, feels that markets have gotten way ahead of themselves in exuberance over a few positive signals. Therefore, sa significant correction is likely this year. "The macro news is going to surprise on the downside. US will report a 2% contraction in GDP for 4Q2009, against market expectation of positive growth. This is going to be negative for the market." He also predicts more financial shocks along the way, and a number of emerging-market economies plunging into financial crisis. For markets to recover more permanently, we must see "significant increase in domestic private demand in Asian countries, something which is still missing currently. Roubini, is however, bullish in the medium term, which he defines as three years or more. By the way, Roubini has correctly predicted the colossal housing bust and a resultant recession.

So, where does this leave for my trading? I buy Roubini's version, that the markets will turn down again later, after a significant run-up. However, I also agree with Daryl that the trend for the stock markets has turned up now. As a trader, for now at least, I must trade from the long side, although I do feel markets, on a run for many weeks now, are due for a significant correction, after which they will recume their uptrend. It won't be so soon that the trend turns bearish again. So, I need to wait for the correction to come, before joining in the rally.