It has been an interesting week, with the expected downward trend, despite the rally on Friday. So is this just a taper tantrum, like we had last year, or a more sustained bear market, maybe even warning shocks before a crash? The crystal ball is very cloudy, because there are so many unknowns:
1. Will the FED resume QE? Personally, i think it very unlikely, as they will be seen by many to be bailing out investors/banks and/or reacting to European problems when the Europeans themselves won't. Odder things have happened, and maybe the Greenspan and Bernanke 'put' will be followed by the Yellen 'put'. I still doubt it; i suspect they will limit it to a few 'verbal hints' to jolt markets upwards when they are falling, without actually doing anything.
2. Will one or more of the weak EURO nations finally break free of the dead hand of the ECB, or will the ECB do a lot more (like real QE)? The trouble is, the EURO area has been limping on for so long, with nothing much changing. Draghi talks a good fight, but so far it hasn't been much more than talk.
3. Will the response to Ebola be any better than the fumbling efforts so far, and will the spread to the US/Europe become more than a few cases, will (or when will) it get to Asia?
4. How will all of the geopolitical crises from Ukraine to Hong Kong to ISIS play out?
5. The fall in commodity prices, from oil to iron ore, will give consumers more money to spend, but how much does this reflect slowing in China?
Personally, I am keeping my powder dry. I know that the STI is supposed to be fair value at the moment, but I can't see any screaming buys yet. If it just a short term tantrum/correction, I may miss out a little on the upside, but I would rather be cautious and wait until i see an opportunity that I just can't resist, even if it is a long, maybe very long, wait.