 |
N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "Global markets are certainly very
jitter now, with no clue as to how Mr. Tim Garnett is going to announce the
banks rescue plan. Couple with the option expired last Friday, the indexes
were badly beaten in the early to mid part of Friday and only saw some
recovery towards the closing. With USA market closing negative on 6 out of
the past 7 days, the market is certainly very much over sold in the short
term. Plus the rumor that Mr. Tim Garnett may announce the rescue plan next
week, the market is ripped for some form of rebound. But how strong is the
rebound will be very much depend on the plan itself. If the market finds
that the plan is just another so so as per before, than another big sell
down is likely. There are another 51 S&P 500 companies report their results
next week, including Dow component Home Depot on Thursday. Plus a series of
economic data, such as Tuesday's Case-Shiller Home Price index, Consumer
Confidence, Bernanke semiannual report to the Senate Banking Committee on
monetary policy and the state of economy. Wednesday's January Home sales,
Thursday's New Home sales, Durable goods orders and weekly jobless claims
and on Friday Chicago manufacturing survey. All these could make next week
market even more volatile. Expect market to have some rebound in early to
mid next week, however such rebound may not sustainable if there is no
concrete and good rescue plan comes out from Mr. Tim Garnett. As such market
may end up facing another big sell off by end of the week." True enough, we
had a quick rebound in early part of the week but was eventually given way
to another sell down by end of the week due to unsatisfactory actions by the
USA government on the bank rescue plan. We also said that, "As for STI there
could be a rebound in early to mid of the week, however the rebound should
cap below 1677 and the index is likely to face another sell off by end of
the week." Again we were right to the dot, STI did attempt to rally in the
early part of the week but was capped firmly below 1640 level and eventually
gave way to another selling by end of the week. So, what could we expect
from here, giving that market has been gradually melt down without any sign
of rebound. Are we going to see another sell down next week? When will be
the bottom?
The proposal of swapping preference
shares to ordinary shares for Citi bank did not seem favorable from the
market point of view, which result in another cross the board selling last
Friday. This time the S&P 500 has given way to below its 21st Nov'08 low,
which put it in line with DJIA and DJ Transport index for searching a new
low. With major indexes now breaking below their respective 21 Nov'08 low,
we would expect this situation to carry on for a while before a bottom is in
place or rather a U turn may occur. However, giving that the market is
now very very oversold, a quick rebound could happen any time now. This does
not mean a bottom is in place, rather a quick rebound then follow by another
sell down may be the best case to happen. With corporate results season
almost over, the focus is now shifting to economic data again. There are a
string of economic data to be announced next week. On Monday we will have
Personal Income and Spending, followed by February National manufacturing
report. Tuesday January pending home sales and February Auto sales.
Wednesday ADP monthly jobs survey for February, Fed's beige book of economic
conditions. Thursday weekly jobless claims and January factory orders. Then
finally, we have non-farm payroll to be announced on Friday. The string of
economic data will certainly create volatility next week, of which Friday
could be the great finale! Expect DJIA to have some rebound in early part of
the week, however another sell down may start by middle of the week and
carry till end of the week. Any rebound on DJIA will be capped by 7400 level
and eventually may see DJIA drops to 6900 or below. As for STI it may break
below 1570 in early part of the week and hold below that level on range
trading for a couple of days before another sell down by end of the week. We
do not rule out the possibility of STI testing below its 28th Oct'08 low of
1473 by end of the week if not the week after. This may sound very negative
for the market, but on the contrary a bottom may be reaching soon, which we
expect may come by middle of March. As
such, for mid term
investors, if you still holding short with good profit margin, you may
consider taking profit if STI drops near its 28th Oct'08 low then stay
sideline. As for short
term traders, you may want to consider covering your short in early part of
the week and perhaps re-initiate shorts again by end of the week..
The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 7400
13100 7700
Support 6950
12000 7000
As for STI the resistances and supports
are as follow:
Resistance: 1630, 1677, 1700, 1717, 1750, 1780
Support:
1570, 1550, 1473, 1350, 1200
Events To watch For The
Coming Week:
- The movement in Dow Jones
Industry and NASDAQ..
- The
movement in currencies, oil and commodities price.
-
The development on Europe for their financial rescue plans.
-
The economic data such as Monday we will have Personal Income and
Spending, followed by February National manufacturing report. Tuesday
January pending home sales and February Auto sales. Wednesday ADP
monthly jobs survey for February, Fed's beige book of economic
conditions. Thursday weekly jobless claims and January factory orders.
Then finally, we have non-farm payroll to be announced on Friday.
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 |