 |
N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "Well on one hand we have end June
financial reports coming up for many corporation and fund managers. This
will be positive to the market for many fund managers would like to do some
window dressing for their portfolio holding. However, markets are really
very over bought and that an immediate correction could be any time. We
believe these two forces will continue to play in the market until July. For
the coming week, we do not have many important data. We only have on Monday
Housing Index for Home Builders, Tuesday's PPI and housing starts,
Wednesday's CPI and Thursday's weekly jobless claims. These may have impact
to the market but are not as important as data such as non-farm payroll. As
such, we believe market may be going for some form of correction but may
rebound by end of the week. For DJIA, we believe it will have support at
8600 and could be bouncing up from there by end of the week." True enough,
while DJIA appeared to make some correction, the big drop did not
materialized. We also said that, "As for STI, it may continue to drift lower
and test the support at 2350. A break at this level, will lead to the index
testing another support around 2270. Only a break below 2270 will lead to a
bigger degree correction." Again we were right, STI did continue to correct
and at one stage it broken below 2270 and only managed to close slightly
above it on Friday. So, moving forward we are now heading to end of June,
will the market hold on to this level and push up further on the last week
for window dressing? OR will the market starts to drop from here, as too
many investors are expecting the window dressing?
Well if my reading is correct, the
global markets were going through a distribution process over the past one
month, where most of the funds that invested in early March'09 were happily
taking profit ahead of their financial report. Leaving those late comers and
retail investors holding the babies. Will the end June window dressing come
into play? I am not very sure, for the more people expect it to be, the less
chance it will be happened. Remember when thing becomes obvious, it is
obviously wrong! For this week, the economic data are relatively light. We
only have on Tuesday Existing home sales, Wednesday Durable goods and New
home sales, Thursday Jobless claims and Friday Consumer sentiment. These
data may not create any big movement for the market. We also have Fed
meeting on Wednesday and the bond auctions, which may have some impact to
the market, but may not be substantial. As such some window dressing during
this quite period is still possible, but I would expect to be very brief and
if any, could be on selective stocks only. However, once investors sense
that there are no big window dressing activities, a bigger degree sell down
may occur. We believe USA market has completed its top on 11th June and is
now in the process of coming down. The only thing that we are not sure is,
whether it will drop from here or it will have a small rally on month end
window dressing before selling down. As such, for aggressive investors, we
would suggest you to start shorting now. However, if you are a conservative
trader, you can start shorting when DJIA breaks below 8460. As for STI,
if there is a short term rally, it will likely be capped at 2320 and should
start to come down from there. A break below 2240 will ignite another big
sell down. As such, we remain short since last week when STI broke below
2350 and kept our stop loss just above STI high at 2424. If STI breaks below
2240 we will add more short positions. As for mid term
customers, I would assume you have squared all your positions by now. You
may also try to add more short positions when STI breaks below 2240.
The following are the support and
resistance to watch for Dow Jones, Hang Seng and Nikkei next week.
Dow Jones Hang Seng
Nikkei
Resistance 8640
18700 10000
Support 8475
17650 9650
As for STI the resistances and supports
are as follow:
Resistance: 2320, 2350, 2371, 2424, 2465, 2500
Support:
2270, 2150, 2100, 2050, 1960
Events To watch For The
Coming Week:
- The movement in Dow Jones
Industry and NASDAQ..
- The
movement in currencies, bond, oil and commodities price.
-
The Wednesday Fed's meeting.
-
The economic data include Tuesday Existing home sales, Wednesday Durable
goods and New home sales, Thursday Jobless claims and Friday Consumer
sentiment.
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 |