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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "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." Well, true enough Dow was very volatile over the past one week
with one day up and another day down, only came Friday we had a break up in
the index. We also said that, "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. " Again, our worried was right! STI could
not manage to stay above 2900 and caused a sell down to near 2800 by end of
the week. So, with Dow Jones rallied to above recent high, will that help
our market? Could we have a good rally in the coming week?
Well, there certainly had a
disparity between Asia stock markets and USA market. With Dow Jones
continued to show sign of improvement, Asia markets had tumbling down last
week. The sell down was accelerated on Friday, after investors disappointed
that China did not support the stock market during Olympic time. On one
hand, it could be interpreted that funds were selling Asia and bought USA
market, on the other hand the tumbling on crude oil, commodities and the
strengthen in US$, could be the main reasons that caused the sell down in
Asia and the rallied in USA market. So, what would happen next week? Will
the sell Asia and buy USA continue OR will Asia finally agree with US market
and start to rally soon? I believe this rally in USA market is still a
counter rally in nature and is likely to stop between 12200- 12000 level.
Another sell down may start by end of August. As for Asia market we could
see some form of rally early next week, but do not expect a big one, cause
most of the Asia indexes are not geared for big rally yet! We expect after
some rally in early next week, markets are likely to face another sell down
by end of the week. The cause of sell down could be due to the release
of July Retail Sales figures and weekly crude oil inventories data on
Wednesday OR the release of CPI data on Thursday. As for STI, I expect some
rally early next week to challenge the 2900 level again, but again it will fail and drop
by end of the week. The negative sentiment in China stocks will continue to
rule the market and will affect STI in the coming week. I really hope that
you had listened to my last week advise to sell your short term position in
early last week. If not, you should continue to sell your holding early next
week when there is a rally. Indeed we are now entering into a very difficult
market, unless you are very sharp in your entry level, it is not easy to
make money on short term trade. So, may be you want to scale down your
trading positions and do act quick in your enter and exit strategy. 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 11800
22430 13550
Support 11220
21740 12900
As for STI the resistances and supports
are as follow:
Resistance: 2820, 2850, 2900, 2947, 3000
Support:
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, Wednesday US Retail Sales and Weekly crude oil
inventories. Thursday CPI.
-
The continue of major report earnings. Thursday Wal-Mart Stores.
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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