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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "We could expect volatile market next
week, for we have big major banks announced their 1st quarter results and
some important economic data to be released. With many analysts calling for
a correction two weeks ago, we had been saying that DJIA could be heading to
8250- 8400 level before seeing some pull back. Indeed we were right and DJIA
now looks increasing possible to challenge the 8250- 8400 resistance next
week. There are 29 S&P500 companies announcing their 1st quarter result next
week. Starting with Tuesday Johnson & Johnson, Intel Corp and Goldman Sachs,
Thursday JP Morgan Chase, Google, Friday Citigroup, General Electric. All
these big companies results will have direct impact to the market. On
economic data, we have Tuesday PPI and Retail Sales, Wednesday CPI and New
York manufacturing survey and housing market index, Friday Consumer
Sentiment. All of them will make the market even more volatile! We expect
DJIA to continue its rally in the early part of the week towards 8250- 8400
levels. Once it has done, the market will likely experience some correction
by middle to end of the week. The buy on rumor sell on fact may be is the
name of the game this time." Well we were right to the dot! DJIA continued
to rally despite many analysts had been calling for a correction. Indeed it
went to a new high of 8168 before last hour selling down. We also said
that, "As for STI it is likely to move up in the early part of the week to
1880- 1920 level before correction emerge by middle of the week. In
Singapore, the blue chips rally may be slowing down this week, while S Chips
and second liners shall remain as the focus point. I would not surprise if
the 3rd liners may start to move soon." Again we were right. While blue
chips began to slow down, we had witnessed a spectacular rally on S Chips
and 3rd liners in early part of the week, before they sold down on profit
taking. So, global stock markets had been rallied for 6 weeks, can this
rally continue? What could we expect next week?
The stock markets have now entered
into their 6th weeks of rally without a single week of correction. The S&P
has its strongest advance over 76 years since 1933! This is merely a fact
and does not imply a correction must come by now (as you may have seen many
analysts had called for a correction two to three weeks ago but failed to
materialize.) However, we believe the stock market is now at its important
cross road. For example S&P is now very near to its 875 major resistance and
the recent rally appeared to have lost some of their momentum. This has
suggested to us that there could be a correction coming soon. However, if a
correction failed to start next week, it may also indicating that the
underline market remains very strong and could eventually propel another
impulsive wave up! What ever it is, a sign of either a correction or a
strong rally should emerge next week! And as my customers, you will be the
first one to get notify. To simplify, the following will be major resistance
and supports to watch for S&P 885- 845, DJIA 8233- 7960 and STI 1960- 1886
next week. A break on either side, will probably signal a near term trend
for the market. From fundamental point of view, we have a fairly light
economic data next week, include Monday March leading indicators, Thursday
jobless claims and existing home sales and Friday durable goods and new
homes sales. So, the main focus will be centered on earning reports. The
results of DuPont, McDonald's, Honeywell, Microsoft, 3M plus banking
companies BOA and Morgan Stanley will probably have great impact to the
market. Indeed the movement next week will have great implication to the
market mid term direction. At this juncture, we believe the odd is still
favor a sharp correction in the coming weeks than a continue impulsive
rally. The buy on rumor sell on fact continue to play in the market and
perhaps an unexpected bad corporate earning may be the one who trigger the
next big correction. As for STI it is likely to stay sideway on Monday,
however any break below 1886 will trigger a bigger degree of correction. As
such, for mid term
customers who had followed my email advise to purchase on 3rd March, and
subsequently added some stocks on 6th April, you may want to consider taking
some profit from the table, and wait for a pull back before re-entered
again. As for shot term investor, you may
participate on the short side, for I believe the coming sell down could be
short and sharp!
The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 8250
16340 9068
Support 7950
15200 8720
As for STI the resistances and supports
are as follow:
Resistance: 1920, 1960, 2150
Support:
1886, 1850, 1800, 1780, 1717
Events To watch For The
Coming Week:
- The movement in Dow Jones
Industry and NASDAQ..
- The
movement in currencies, oil and commodities price.
-
The corporate earning results on DuPont, McDonald's, Honeywell,
Microsoft, 3M plus banking companies BOA and Morgan Stanley.
-
The economic data such as Monday March leading indicators, Thursday
jobless claims and existing home sales and Friday durable goods and new
homes sales.
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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