 |
N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "The typical Summer time slow market
has certainly started and look set to continue. While the weak crude oil and
commodities price may fuel some more rally in USA stock market, the momentum
seems to have slow down over the past one week and that the 12000 level may
not be challenged in Dow before market turning down again! With corporate
results announcement almost come to the end, the main focus next week will
be crude oil and commodities movement. Giving that crude oil has been down
for nearly two weeks there is a possibility that some sort of rebound may
occur and that will give pressure to the stock market. We believe Dow Jones
Industrial is about to turn down soon and a break below 11450 will
accelerate the sell off, so do exercise cautious. Only a strong move above
11800 will raise hope that Dow will continue to rally and challenge the
resistance at 12000." True enough, crude oil and commodities did stage a
rally in early part of last week and caused Dow Jones Industrial to sell
down before the weekend rally. We also said that, "As for STI, I expect a
small rally on Monday but will stay quite throughout the week with a likely
chance of continue drifting lower to the support at 2745." Again, we were
right! STI did confined to a very tight range after Monday gapped down and
was now staying just below its Mar'08 low of 2745. So, what could happen
next week giving that there was a strong rally in USA market last Friday.
Will STI stage a good rebound from here or will it continue to move lower?
In fact the typical Summer doll drum
has been started few weeks ago and looked set to continue. Technically most
of Asia stock markets are now much weaker than its USA counter parts. As
such I would not be surprised to see Asia lead the way down in the coming
sell down! Expect USA market to have some rally in the early part of the
week but then the Bear will eventually take over and sell down in the market
till end of the week. Perhaps some housing data or consumer confidence index
or the crisis in financial sector will lead the way down. Indeed we believe
the sell down is not over yet! As for STI, there is a possibility that the
Index may attempt to rally and cover the gap at 2773 in the early part of
the week, however it is likely to face a sell down by middle to end of the
week. As an investor may be this is the last opportunity you have to get out
of your long positions, so do treasure it! I do hope that you had got out
your long positions by now after my warning in the past three weeks. If you have not
get out of your long positions, Monday and Tuesday may be your last chance
to get out! OR you may need to lower down your expectation and consider cutting loss ahead
of a potential big sell off in the coming weeks. 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 11870
21000 13420
Support 11290
20380 12500
As for STI the resistances and supports
are as follow:
Resistance: 2745, 2780, 2820, 2850, 2900
Support:
2700, 2680, 2600, 2580
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
Russia and Georgia.
- The
economic data, Monday Case-Shiller home prices index and Existing home
sales, Tuesday Consumer Confidence Index, Wednesday Durable-goods..
-
The development in Freddie and Fannie, as well as Lehman Brothers.
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 |