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After a big crash last week of almost 15% (recovered on Friday -6% to -1.9%), US equites rebounded 13% on Monday night. STI on Monday went up to 6 % and another 7% on Tuesday. I sold 3 SIMISCI at 272.2 (Fr 255), SGX 30 contracts at 6.12, 4 S&P 1043 and 6 1053. Long 10 Nymex mini-oil at 82.9. I had expected a long overdue rally on Monday. So I went in to short on Tuesday STI. S&P futures was positive also. It went as high as 1059 as Paulson went live to talk on the bailout package.

My idea is a pairing where I long oil and short S&P, where if markets go up, oil long will cover my shorts. If markets drop, I expect markets to drop harder than oil.
Very wrong, oil dropped faster than S&P futures. I cut oil at 77.9 as it was speculative. At least my S&P drop could compensate my losses. Why I long oil
- oil with less supply than demand is still a bull market for oil

Why I cut oil and my conclusion.
- entry is important
- oil with reduced demand due to recession
- speculative positions will be cut
- trading firms are now getting their credit lines cut, therefore cutting their position further
- 55 dollars is a good entry point

I also close all my short positions on Friday.
SGX 5.61 (Thursday - very stuipid)
SIMSCI 241.2
S&P 946
Why I close my shorts, did not want to lose a winning position.(more emotional than any logical thinking)

My thoughts right now
(-) things will probably get worse
(-) credit card crisis will be next
(+) LIBOR credit swaps are getting slightly better
(+) FED will purchase 250 billion of shares in Financial institution
(+) Warren Buffett is buying
(+) VIX very very high (70+)
(+) Oil is dropping
(+) Bad news follows a drop before rallying. The situation could be changing to rallying on a bad news. Sentiments are really bad now which is a contarian indicator.

I am anticipating a mini short volatile movement up. Lets see when VIX drop to 50+ or S&P at 99+.

Portfolio down -16% now. with Celestial at 30.5 cents with PE is now 2.2 with expected earnings of 14 cents. Soyabean futures now trading at 905 dollars down 40% from high of 1500+ . It also declared on 13 Oct that its products is cleared of melamine.

My thoughts on S-shares.
Sentiments are quiet bad now on S-shares. My thoughts, it is only in extremely bad sentiments that stocks get battered so badly. China will be the next superpower, and good sentiments will be back, so no worries. We have already seen RMB appreciated 10% against S$ the last 1 year. A lot of people also condemn the S-shares here mentioning that HK shares are much better. Well, this is what I think - HK shares are mostly big blue chips and growth will be quite limited. S shares on the other hand have smaller capilization and growth for 5-10 baggers are there. But saying that, I agree alot of S shares here are very poor quality. No matter how attactive the PE (even 1) or PB (some even below cash value) of textile or capital intensive industries companies or cyclical companies, cashflow negative companies, I avoid them like a plaque.

My investment is still on solid companies with sustainable advantage, continuous growth, continous innovation, management who align themselves with shareholders.

My China Milk divestment was with the same principals. Even with record profits, it did not give a dividend and although it gave a dividend in Q1, it was a puny 0.5 cents. If they could justify with investment within that year, I could still give it a benefit of doubt. Thus, I sold out and reinvested back all in Celestial.

Besides Celestial, there are also a few worth investing, a cosmetic company, a shoe company, a company selling pork, and a bottle manufacturing company. All of these copmanies PE (around 3-4) is still higher than Celestial 2.2, thus I have no urgency to invest in them yet.