Personal Market View - Low Vol Clips Market, Dump Big, Speculate Small, Invest Defensive

Low Vol Clips Market, Dump Big, Speculate Selective Small, Invest Defensive
by ckchoy

Tracing back my data, I still can see STI average volume in Jan 2011 is about 2 bil. But from Feb onwards the volume has been dropping and till now it maintains at low as 1 to 1.5 bil for about 3 months plus.  Volume in the market is important as without it, any upside is hardly held and unsustainable.

Switch to defensive
If you trade blue chips, you will have the feeling it goes lower and lower, the rebounds are short but the drops are fast and more sustained.
There are some signs that funds are getting into the defensive like defensive stocks and preference shares. If you are a preference shares investors, you will notice the prices are appreciating. Hence this is another sign investors are getting defensive.

Trade short term
But market will not die, there are still speculations around especially short term traders, day traders and brokers still need to make a living by trading, hence you can see once a while, selective small caps will be in played. The action is hardly broad based due to low liquidity.
Until we see volume comes back, may be it is wise to dump big caps and speculate selective(those may have news speculation) small caps. Goto defensive
Short term (1 - 3 weeks) - switch to defensive, speculate selective small caps. But no hurry to cut blue chips, can sell on strength for any rebounds.
Mid term ( 1 - 3 mths) - accumulate blue chips slowly, but must have the mindset to hold for few months.  When volume started to pick up, the sentiment for blue chips will be back.