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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "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!" Well, the actions last week was exactly as
per our expectation. With a strong closing last Friday, Ladies and Gentlemen
may I declare the winner is the Bulls! We also said that, "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." Again, we were right to the dot! STI did come down on
Monday till the low of 3033 (to close the gap at 3046) and had moved up to
close at 3124 (above the 3100 mark that we were expecting). So, suddenly all
the mood have become optimistic, will it last long? What should we do next
week if we have no holding of stock yet?
The closing of Dow Jones Industrial
index at 12849 last Friday (above the all important 12800 level and topping
its Feb 1 intraday high of 12841) is very significant to us. It has not only
shown us the Bulls are in control now, it also confirm a bull run that will
last for at least the next two months or so. With many Bears have not yet
closed their short positions and a huge amount of cash holding by Mutual
Funds still on the sideline, this time the run up could be very impulsive!
With bad economic data such as Unemployment data and bad banks earning
reports behind us, there is hardly any bad events that can stop the Bull's
stampede. Technically with Dow Jones Industrial closed above 12800, a
reverse head and shoulder formation is confirmed, which pointing to a target
of 13800 or above. This is indeed very bullish for the next two months. We
expect Dow Jones to continue rally towards 13000 before any pull back
emerge. Although there are many multi industrials corporations results
coming out next week, we believe the impact on downside will be minimal. The
Spring rally has indeed started! As for STI, we could expect a gap up on
Monday, which may be above the previous top at 3182. If this happened, the
reverse head and shoulder formation will bring STI into a target range
between 3400- 3600 level within two months time. The initial phase could be
very impulsive, for not only Mutual Funds need to buy shares, the shortists
also need to cover back their short in aggressive manner. So, if you have no
position at current stage, you will need to jump in fast! At the moment, the
China related stocks have been lagged as compare to the blue chips, so you
may want to consider buying them. With Shanghai Composite index drops nearly
61.8% from its top, we could expect a strong rebound coming soon. So, it
would be a good idea to position yourself and capture the move, giving that
USA side has already shown sign of bullishness. As for traders, you have to
trade on the long side from now onwards. And if you are an intermediate term
investors, you simply have to start buying now! For STI, the 3046 is now an important
support and the resistance is now at 3300. The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 13000
24670 14100
Support 12270
23300 12875
As for STI the resistances and supports
are as follow:
Resistance: 3182, 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, Wednesday's Existing home sales, Thursday's Jobless
claims, Durable goods orders and New-home sales, Friday's Consumer
sentiment.
-
The
corporate earning reports:
Monday- Merck, Texas Instruments, Mattel, Eli Lilly
Tuesday- Dupont, AT&T, McDonald's, Yahoo, National City.
Wednesday- Boeing, Apple, Amazon.
Thursday- 3M, American Express, Microsoft, Motorola.
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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