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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "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." Well, last week action had come close to trigger a
major correction! However, thing has become more complicated on Friday
closing. We also said that, "As for STI it is likely to stay sideway on
Monday, however any break below 1886 will trigger a bigger degree of
correction." While STI did break below 1886 last week, it did not have much
follow through on the down side. So, what could we expect next week? Will
the strong performance in FTSE and NASDAQ propel a strong rally in global
stock markets?
Well the global indexes had come
close to a major correction last week. However, a strong rebound in FTSE and
NASDAQ last Friday (both cleared their respective recent high) had
complicated the whole wave structure. The global markets are now back to
their equilibrium point and await for further clue on mid term direction. At
this point in time, our view of resistance and support for S&P 885- 845, DJIA 8233- 7960 and STI
1960- 1886 remain unchanged. A break on either side of the indexes, would
probably set the mid term direction for the market. With about 50% major
corporate earning been announced by now, the impact on earning report for
the coming week will be lesser. Besides, there are no major economic data to
be announced next week and that Friday will be a public holiday. These will
give some breather for both the Bears and the Bulls. We expect market should
be trapped within a trading range for the coming week, while investors
prepare themselves for the announcement of banks stress test on 4th May. As
such, S&P, DJIA and STI will likely stay within their respective resistance
and support levels that we stated above. However, if there is any break out
(either on the upside or downside, with strong volume), it will likely be a
market direction setter for the coming weeks. As for STI it is likely to stay
range bound between 1950- 1830 level until the USA market gives a clearer
direction. 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
stay sideline while waiting for the break out on either side before jumping
in.
The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 8190
16000 9068
Support 7950
14800 8600
As for STI the resistances and supports
are as follow:
Resistance: 1886, 1920, 1960, 2150
Support:
1850, 1830, 1813, 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 Monday Verizon, Wednesday Qwest,
Thursday Motorola.
-
The economic data include Tuesday's Federal Reserve meeting and the much
focused-upon 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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