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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "Last week was certainly quite
positive for the stock market, for it finally managed to have a positive
close after a 7 weeks consecutive negative closed in Dow Jones Industrial.
Although last Friday trading and closing was not so convincing and that last
week rebound had in fact satisfy the minimum rebound target for the Dow, we
believe the rebound may have not over yet! Will last Friday's low turn out
to be another low that will follow by another leg up? I think the chances
are pretty high. Last Saturday, the Congress had finally approved the bill
to assist home loan mortgagees and Fannie and Freddy, which should be
a boost to the market. With most of the banks and financial institutions had
reported their earning last week, the most volatile stocks had been taken
out from the equation, which mean there may not have much more bad earning
news to be announced next week. However, there are still heavy corporate
earning to be announced, follow by the important job data on Friday, which
will bring the volatility to the market. As a whole I would expect Dow would
likely to go up. The first sign will come if Dow Jones Industrial climbs
above 11500 by early next week. On the other hand, if Dow Jones Industrial
breaks below 11200 early next week, than a big sell off will be followed
suit." Well, last week was rather volatile in USA market, with Dow wildly
swing between the 11200 to 11600 level. and until last Friday there was no
clear winner between the Bulls and the Bears. We also said that, " As for STI, I expect some rally early
next week to challenge the 3000 level again, only a strong break above this level
will lead the index to test the eventual target of 3200 level. However, if
STI could not rally in early next week and begin to turn down and breaks
below 2900 than more troubles may come." Well STI did try to trade up last
Thursday, but was unable to move above 3000 and on last Friday, it was sold
down and closed very near to the support at 2900. So, what could happen next
week? Who will emerge as a winner, the Bull or the Bear?
Well we certainly like to give you a
clear answer as to who will be the winner eventually. However, after the
action last week, the market is even more confused. Although there is a
volatility in USA market, there simply lack of clear winner. And we believe
such situation may continue this week. Looking forward, most of the
important corporate results had been announced, as such the market will
likely to refocus on economy data and the FOMC meeting on Tuesday. However,
with Fed now having limited resources to boost the market, their hands
are tight and I believe the FOMC meeting will not provide any big clue as to
where the Interest rate is heading. In other word, the market will continue
to be volatile and confine to a trading range. As a whole I would expect Dow
to trade up in the early part of the week but will sell down by mid - end of
the week. As for STI, I expect some rally early
next week to challenge the 3000 level again, but again it will fail and drop
near 2900 by end of the week. Only a strong break above 3000
will lead the index to test the eventual target of 3200 level. However, if STI could not rally in early next week and begin to turn down and breaks
below 2900 than more troubles may come. If you are a short term investor,
you may have follow my advise to turn long three weeks ago, and you should
be sitting with some good profit especially if you are in stocks like Ferro
China and Li Heng etc. My advise is perhaps you may want to start taking
profit for those stocks that have been rallied. As for medium term investors,
my suggestion is to stay sideline and wait for good opportunity to come.
The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 11700
23330 13550
Support 11130
22000 13000
As for STI the resistances and supports
are as follow:
Resistance: 2947, 3000, 3030, 3080, 3100
Support:
2900, 2850, 2820, 2780, 2745, 2700
Events To watch For The
Coming Week:
- The movement in Dow Jones
Industry and NASDAQ..
- The movement in
currencies, oil and
commodities price plus tension from Iran and Israel.
- The
economic data, Monday Consumer spending, Tuesday ISM services, Thursday
Jobless claims and Pending home sales. Also, Tuesday FOMC meeting.
-
The continue of major report earnings. Tuesday Procter and Gamble and
Wednesday AIG.
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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