 |
N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "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." True enough, Dow Jones did make a pull back in early
part of last week as per our expectation. It then began to surge on Thursday
and followed up on Friday. As per our expectation it did close above 13000
by Friday! So does it mean the Bull run is intact? We also said that, "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." Again, we were right to
the dot, STI did continue to drift lower from last Monday to Wednesday, only
make an upsurge last Friday after coming back from holiday. So, with Dow
Jones Industrial closing at positive last Friday, what could we expect STI
to perform next week? Will the index continue to move up in the coming
weeks?
The closing of Dow Jones Industrial
index at 13057 last Friday, has two significant meaning. First, it has
finally closed above 13000 psychological level, second, it has for the first
time in five months managed to close above the 200 days moving average. This
is definitely a big bonus to the Bulls! However, as Dow only managed to
close a mere 48 pts up last Friday, it has shown some signs of tiredness.
Hence I would not be surprised if the index goes for some mid correction in
early part of the week. However, in general I believe Dow should continue to
charge up for another month or so! Technically most of the global stock
indexes have demonstrated that the Bulls should continue, therefore I do not
see there is much pull back in the card! Expect Dow Jones Industrial to have
a mild pull back on Monday and Tuesday before another big surge by end of
the week. My hunch has told me that the current Bull run in Dow Jones
Industrial, could be similar to putting a frog into a pot and slowly boiling
up the water. The frog will probably not realise it until it has been cooked
and too late to jump out! ( I am referring to the huge open positions by the
Bears, of which they may not realise the danger for Dow Jones Industrial may
only climb bit by bit over the days. However, when they realise the danger
and wanting to do short covering, they may be too late to do so.) Besides
the fail takeover on Yahoo by Microsoft, which may have slight negative
impact to the market, there are not many important economic data and
corporate earning results to be released next week, hence there should not
have big surprised to the market. As such, I believe after a short pull back
in early part of next week, Dow Jones Industrial shall continue to charge
upwards. As for STI, we could expect it to continue charging upward towards
3300 in early part of the week and may have a small pull back by middle of
the week. However, as a whole the market should be good and that rotating
play may kick start! Expect blue chips will continue to charge forward and
then follow by China related stocks and second liners. So, short term investors who
continue to buy on any dip and take advantage on the Bull run. As for medium term
investors you may wait till a small pull back and start your accumulation. For STI, the 3147 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 13250
26800 14910
Support 12750
24840 13400
As for STI the resistances and supports
are as follow:
Resistance: 3250, 3300, 3350
Support:
3200, 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.
-
Monday's Institute for Supply Management's service index, Wednesday's
Consumer Credit and Thursday's Jobless Claims.
-
The
corporate earning reports include Walt Disney, Sara Lee and Molson Coors
Brewing.
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.
previous | next |