 |
N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "Well, let's look at the rally since
8th March. Both DJIA and S&P have 8 weeks of positive close as compared to 2
weeks of negative close. The negative close on this week seems more
convincing than the previous negative close (three weeks ago), for it was
closed at the lowest point for the week! This week close was also just below
the up trend line that starting from 8th March, which is another significant
evidence on the market weakness. Having said that, market is rather oversold
short term, as such a sudden rally will not be surprised to us. Next week we
will have very light economic data and corporate results to be announced,
couple with a public holiday coming on the next Monday, we could expect
market to turn quite by end of the week. As such, my guess is market may
have some rebound in early part of the week, but will drift lower towards
end of the week. Indeed, any rebound could be a good chance for you to exit
your long position, for a bigger degree sell down if not been started, may
start any moment! If the market is working in according to our expectation,
we believe after a short rebound in the early part of the week, we may
encounter a fierce sell down by end of the week, if not by early part of
next week." Well market did behave exactly to our expectation. DJIA did
begin a rebound in early to mid of last week, before easing off by end of
the week! We also said that, "As for STI it had failed to stay above its support at
2230,signaling more weakness ahead. If STI breaks below 2100, it is likely
continue drifting lower towards the next major support at 1960." STI did
follow DJIA closely last week and attempted some rally in early part of the
week before easing off. However it did try to rally last Friday in
anticipation of possible rally in USA market last Friday. With both USA and
Singapore market trading within previous week's range and no break out on
either side, what could we expect next week? Is the correction going to
continue OR a break up to new high is coming soon?
Well last week we had an outside
range bar for the week compare to previous week and these had happened
within the down trend line as shown on the STI weekly chart above. It
certainly indicates that market is rather uncertain right now. However since
it has happened near an important resistance level, it also means that a
possible top is forming in the process. Last Friday movement in USA
market was rather weak too, with DJIA attempted to rally into its resistance
line but failed to penetrate through and fall back towards closing. This has
indicated to us that there could be more down side in the next couple of
weeks. While we do not rule out completely a possible of small rally on
Tuesday after the Monday holiday, unless DJIA breaks above 8400, we remain
bearish near term. A break below 8221 will confirm the down trend and will
bring more down side to the market, with a possible initial target of 8050
and a secondary target around 7800. If this is going to happen, it will
likely achieve within the next two weeks. If the market is working in according to our expectation,
we believe it will start to sell down on Tuesday in USA market after the
holidays and the drop could be quite substantial for the coming week. As for STI,
since there is no USA market on Monday, it will likely stay range bound
while the selective second liner may try to rally up. However, STI should
start turning weaker by Tuesday ahead of USA market opening. Once it breaks
below 2190, STI will drop quickly towards 1960 and below. As such, we remain cautious short term but feel
that after a big correction, STI should be able to continue climbing 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 should have taken
profit and stay sideline now. As for short term investor, you may
start looking into opportunity to short the market using CFD or SBL account.
The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 8400
17700 9500
Support 8220
16300 9000
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 faith of General Motor on whether it will end up in bankcruptcy.
-
The economic data include Tuesday's Case-Shiller Home Prices, Consumer
Confidence. Wednesday's Existing home sales. Thursday's Jobless claims,
New home sales etc.
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 |