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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "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!" Well the Bull was certainly in charged
last week, as we had witnessed a continue moving up in Dow Jones to a high
of 12942, just 58 pts short of our target. We also said that, "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 shortlists
also need to cover back their short in aggressive manner." Well we were
right again, as STI did gap up on Monday and traded above 3200. The only
thing that was lagged last week was the impulsive move. So, could it be a
false break up? What should we do next week? Will the Bull continue to
charge?
The closing of Dow Jones Industrial
index at 12891 last Friday, suggested that the index remains on the up
trend. However this represented merely a 53 pts gain as compared to the
previous week closing, which some how rather disappointed to us. In
technical term, it means the momentum has slow down! This is rather
different than what we had expected for an impulsive break out, hence I have
to be rather cautious at this stage. While I believe the Bull is still in
charge and should continue for at least another month or so, the development
suggested to me that the run up may be rather complicated in nature as
compare to what we would expect. As such a close monitor on chart
development and the timing of entry will become a vital part for investors
if they want to ride on this Bull. Come next week, we have some important
economic data, corporate earnings and Fed meeting. These are important
factors to decide where the market is going to be in the next two months.
The important days are Wednesday and Friday. For Wednesday, we have Fed
meeting on whether there is a cut on Interest rate and the first quarter GDP
data. We also have corporate results from three giants, namely Verizon
Communications, General Motors and Procter & Gamble. For Friday, we have the
all important Unemployment data and Chevron Corp results. To me, I would
rather see some pull back in Dow Jones on Monday and Tuesday, so that it can
charge forward after Wednesday and Friday data. Whatever it is I believe
next week will be a make-or-break week for the market! Technically most of
the global stock market still favoring an upside in the coming months,
however some short term pull back may be necessary. For Dow Jones Industrial
a strong break above 13000 will be a good signal to the market that the Bull
is firmly in charge. As for STI, we could expect a good opening on
Monday, but the index should slowly trend lower on Tuesday and Wednesday
before the important data to be released in USA plus we have a public
holiday on Thursday, which will lead us to a quieter market by mid to end of
the week. So, short term investors who had enjoyed a good run last week may
like to take profit ahead of May day public holiday. As for medium term
investors you may wait till Friday to begin accumulation again. 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
26700 14100
Support 12500
24840 13300
As for STI the resistances and supports
are as follow:
Resistance: 3200, 3250, 3300, 3350
Support:
3182, 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 first quarter GDP and the all important
Unemployment data to be released on Friday.
-
Wednesday's Fed meeting on Interest Rate action.
-
The
corporate earning reports:
Wednesday- Verizon Communications, General Motor and Procter & Gamble.
Thursday- Exxon Mobil
Friday- Chevron Corp.
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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