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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "Well the market has certainly caught
many by surprise on its strength to go up, but not for us. In fact we were
expecting market to move last week! The Fed action on purchase of T-Bond was
the key on the market moving and of course short covering did play an
important part. The nature of price movement last week had suggested to us
that the bear market rally had started and indeed we may have hit an
intermediate bottom. The intra-day correction in USA and Asia market last
week was also very healthy and pointed to a possible of further gain next
week. For next week, the main focus will be on Mr. Tim Geither. On
Monday he is likely to present the details on Public-private joint venture
to purchase the toxic assets, which will be very crucial for the market.
Subsequently, on Tuesday for the bail out of AIG and Thursday on bank
regulation. Mr. Geither certainly has a chance to rebuild his reputation
this week, should his action cause the market to rally further! On economic
front, the data are relatively light. We have Existing home sales on Monday,
Wednesday New home sales, Thursday Jobless claims and Friday Consumer
sentiment. We believe current rally is a bear market rally on a bigger
scale, as such it may last for couple of months. And since this is a bear
market rally I would expect the rally to be very sharp and may continue to
go up and catch many by surprise. Expect DJIA to eventually test the 8000
level soon before any meaningful correction emerge." We were right to the
dot! When many analysts were rushing to give negative reports two weeks ago,
we had already signaled a possible of intermediate bottom. And we had even
predicted a test of 8000 in DJIA last week (which had come very close to
it!) Indeed, our attempt to call for an intermediate bottom was successful!
We also said that, "As for STI it will
probably test the 1680 level before any possible of correction. This bear
market rally got a potential of carrying STI to 1950- 2050 level within two
months time." Again, we were right, STI not only tested the 1680 last week,
it had surpassed the resistance and went all the way to test its next
resistance at 1780! So, is the bear market over! Where could we expect from
here? Is a correction coming soon?
Well, we have a continue three weeks
of rally with each week closing at higher high. We also have a reversal bar
closing on monthly chart for the month of March, so long as DJIA close above
7063 on 31st March (which is very likely). These are strong indication that
an intermediate bottom has formed and that at least a technical rebound is
on its way, and it is still in a very early stage! I would not be surprised
if the rally can continue to move up till 8400 before a more meaningful pull
back occur. However, after three weeks of continue rally, where S&P had the
largest three weeks gain since 1938, the market is certainly ripped for some
form of pull back! For next week, there are a series of economic data, such
as Tuesday S&P/Case Shiller index of home prices, Chicago manufacturing and
consumer-confidence surveys for March. Wednesday Pending home sales and
Friday the all important March employment report. These will certainly have
great impact to the market, in particularly the Friday job data. In the mean
time, some early earning reports will kick in too, such as Thursday Research
In Motion, Micron Technology etc. Plus the G20 meeting over the weekend,
which will likely add some volatility in the market. We expect DJIA to move
up slightly in early part of the week, however a pull back correction will
start by mid to end of the week and is likely to bring the index down to
near 7600 level. As for STI, it had met its 1780 resistance last week and is
likely to contain there before a correction emerge. I would expect the index
to start its correction by middle of the week and is likely to test 1700-
1660 level before a strong rebound emerge. As
such, for mid term
customers who had followed my email advise to purchase on 3rd March, you may want to
take this opportunity to add some more position in this pull back. As for
those who do not have any position, a pull back will represent a golden
opportunity to jump into the bandwagon! As for shot term investor, perhaps
it would be better you wait for the pull back and then buy on dip and sell
on rally.
The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 7931
14300 8850
Support 7556
13200 8000
As for STI the resistances and supports
are as follow:
Resistance: 1780, 1800, 1830, 1850, 1900
Support:
1717, 1690, 1660, 1630, 1570, 1550
Events To watch For The
Coming Week:
- The movement in Dow Jones
Industry and NASDAQ..
- The
movement in currencies, oil and commodities price.
-
The early corporate earning results on Research In Motion and Mocron
Technology. Plus G20 meeting.
-
The economic data such as Tuesday S&P/Case Shiller index of home prices,
Chicago manufacturing and consumer-confidence surveys for March.
Wednesday Pending home sales and Friday the all important March
employment report.
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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