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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "While there was no clear winner last
week, for Dow Jones Industrial is still stuck in between 12800 and 12000,
there were some signs indicating that the underlying is strong. Despite a
bad unemployment date last Friday, Dow Jones only dropped by 16 points and
that the it had gained a total of 3.2% last week. This is a clear sign
saying that the bottom is in place. While technically we can only confirm a
strong rebound when Dow breaks above 12800, we can safely say that the worst
is over! Come next week, we will have a string of corporate results lying in
the pipe line. However, I believe the market is now pricing in a mild
recession, hence so long as there is no big surprise the market should be
able to weather through. Expect market continue to trade in a range bound
for some form of consolidation next week, i.e.. to say Dow Jones may be
trading within the range of 12800 to 12300 next week. Only a break above
12800 will it invite massive short covering and a rush by mutual funds to go
in and purchase shares. We expect market may only make its move above
12800 the week after, while some big corporations have announced their
earning." True enough, Dow Jones was stuck in a range trading for the whole
week. With Monday attempted to trade through 12800 but failed, it was quick
to pull back and closed at 12325, exactly as per our last week prediction
that it would trade within the range of 12800 to 12300! We also said that,
"As for STI, we could expect it to trade within the range of 3160 to 3050
next week until a clearer direction is defined in US market." Again we were
right to the dot! STI did trade to a high of 3181 last Monday and went to a
low of 3057 last Thursday, but eventually stuck within the range of 3160 to
3050 as per saying. So, what could we expect next week, giving that Dow had
a horrible closing last Friday. Is the rebound over? Or is it a small pull
back before another big rally coming?
While Dow Jones was stuck in a range
last week and there was no clear winner, my feeling is that a winner will be
determined next week. And at this stage I am still more favoring the Bull!
Come next week, USA stock market will be facing a string of important
earning reports and economic data. My hunch tells me that these will
probably determine what stock market direction going to be in the next two
months. Starting from Tuesday we have Intel, Washington Mutual and Johnson &
Johnson result. Wednesday will be J.P. Morgan Chase, IBM, Coca cola, eBay
and Wells Fargo. Thursday will be Merrill Lynch, Google and Pfizer and
Friday we have Citigroup, Caterpillar, Honeywell and Wachovia. Their results
and forward looking statement will have great impact to the market. We also
have some economic data that may have certain impact to the market. On
Monday we have March retail sales, Tuesday National Association of
Homebuilders Index, Wednesday CPI and PPI, Thursday Jobless claims and March
leading indicators etc. Plus the meeting that is currently going on for G7.
Technical indicators have also suggested that the Bulls and the Bears will
have a fierce fight next week and that likely than not a winner will be
announced. So, be alert and ready to act once the winner is determined. As
my client, you will definitely be alerted. Technically Dow Jones should not
break below 12000 to stay in Bullish mode and that it needs to break above
12750 soon to maintain its bullishness. Failing which the Bear will take
over and rule the market again! As for STI, we could expect a sell down on
Monday with support at 3050 and 2927. If STI can maintain above 3000 for the
whole week and close above 3100, a bull run till May-June period will be
very promising. At this juncture, if you are long term investor you may want to
continue buying some more value shares if market has a deep pull back on
Monday but prepare to cut loss if STI breaks below 2927. As for traders, you may have to wait for a pull back
before entering long positions. A short position is rather risky at this
stage. For STI, the 3046 is now an important
support and the resistance is now at 3350. The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 12750
24840 13400
Support 12200
22720 12500
As for STI the resistances and supports
are as follow:
Resistance: 3180, 3200, 3250, 3350
Support:
3100, 3050, 3020, 2930
Events To watch For The
Coming Week:
- The movement in Dow Jones
Industry and NASDAQ..
- The movement in
currencies, oil and
commodities price.
- The
economic data, Monday's March retail sales, Tuesday's April
manufacturing survey and National Association of Homebuilders Index,
Wednesday CPI and PPI, Thursday's Jobless claims and March leading
indicators..
-
The
corporate earning reports, Tuesday's Intel, Washington Mutual and
Johnson & Johnson, Wednesday's J.P. Morgan Chase, IBM, Coca Cola, eBay,
Wells Fargo. Thursday's Merrill Lynch, Google and Pfizer. Friday's
Citigroup, Caterpillar, Honeywell and Wachovia.
The following are two
possible wave counts on STI as at to-date:
- Preferred Count (60% probability)-- bullish count
My preferred count calling for a
top at 2502 (on 7/1/2000) as wave ((1)), it then follow by a two year
sell off on wave ((2)) to 1197 (on 28/9/2001). The index had then entered
into an impulsive wave ((3)) that ended at 3906. We are now in the
development of wave ((4)), of which we expect it to be a big triangle
formation that take about one to two years to complete. The recent sell
down is the first leg of wave ((4)), which will take a form of a-b-c and
reaches the potential target of 2770, as the wave (a) of ((4)). The
index will then continue to develop the (a)-(b)-(c)-(d)-(e) triangle
formation.
- Alternate Count (40% probability)--
bearish count
My alternate count calling
for a top at 2502 (on 7/1/2000) as wave ((1)), it then follow by a two
year sell off on wave ((2)) to 1197 (on 28/9/2001). The index had then entered
into an impulsive wave ((3)) that ended at 2666 in May 2006. The index had
then entered into wave ((5)) that ended on 3906 in October'07. We are
now in the downtrend bear market, which will last for a few years!
Although this count remains as the least chance as compare to my
preferred count. If the index breaks below 2776 convincingly on very
high volume, the odd on bear market will significantly increase.
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