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N.B. Above Chart is abstracted from
NextView Program
Two weeks ago, we said that, "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." True to our concerned,
USA market made a break up and entered into an exuberant state, with global
stock markets experience a strong rally that we had not seen for many years!
The question now is, will this rally continue to push up further, or a
correction is about to come!
Well the mood had swinged greatly
over the past two weeks, from people believed there was going to have a big
correction to the current stage that a bull should continue to charge
further, with a possible of another great Bull run emerged! The mood swing
is certainly incredible and many analysts have been forced to switch their
bear market view into a bull market. As for us, we remain unchanged in our
view, and that we believe the current rally is still a Bear market rally.
The question is, will this be the last rally for this counter trend move OR
it is just wave A of the bear market rally, of which it will have a pull
back before a final wave C rally to carry DJIA into the 10000 level! I am
more incline to the second view. So, if my view is correct, then we would
likely experiencing a pull back correction pretty soon! Since March 8, DJIA
has been experiencing 8 weeks or rally out of the past 9 weeks, the market
is certainly very overbought and should be having a correction any moment.
However, as we had said before, there are about 11 type of correction
patterns and it is very difficult to pin point to the exact correction
formation until it had happened. As such, we have no clue when the market is
going to correct, for the market has not given us a concrete action. At this
moment, what I can say is, if DJIA and S&P both break below 8350 and 898, a
bigger correction should be coming. Otherwise, market is still in its
upswing mode. Perhaps, the inflation and retail sales readings
(Tuesday's Trade data, Wednesday April Retail Sales, Thursday PPI & jobless
claims and Friday CPI) may provide a trigger point for the U turn on the
market. Or may be the result announcement for Retailers such as Wal-Mart etc
on Thursday will trigger a start of correction. Frankly I do not know.
However, to be rest a sure, as soon as there is a concrete sign, you as my
customers will be notified by email. As for STI it has broken its long
term down trend line resistance at 2230 and continued to charge up last
week. The key question is whether STI could continue to stay above the 2230
next week. Failing which, it may be an indication that a bigger degree
correction is on the way. As such, we remain cautious short term but feel
that after a big correction, STI should be able to continue climb up into
higher level. 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
profit now. As for short term investor, you may
stay sideline while waiting for break down to short the market.
The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 9000
18000 9521
Support 8350
15500 8827
As for STI the resistances and supports
are as follow:
Resistance: 2300, 2350, 2380, 2400
Support:
2230, 2150, 1960, 1885, 1850, 1830
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 retailers, such as Wal Mart on
Thursday.
-
The economic data include Tuesday's Trade data, Wednesday April Retail
Sales, Thursday PPI & jobless claims and Friday CPI.
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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