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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "Well after a continued strong rally
over the past four days in USA market, the technical picture has changed. It
is now more favoring the upside for the coming months. The only question is
whether the market will continue rocketing up or having some pull back
before the next rally emerged. From the wave structure, S&P looks like about
to complete its 5 waves up, if so this will lead to some form of correction
before the next rally kicks in. I would expect there should be some form of
correction in the early part of the week, of which DJIA and STI may pull
back to their strong support at 8408 and 2350 respectively. Once this
correction is completed, we will see a strong impulsive rally kicking in.
Only a break below 8250 and 2200 on DJIA and STI will change our bullish
count. For next week, we have very heavy corporate results announcement.
Starting from Texas Instrument and Zions Bancorp on Monday, followed by Du
Pont, Caterpillar, Western Union on Tuesday as well as results from Apple,
AMD and Microsoft. These are more down to earth real economy companies, so
the result may not be as rosy as the big financial firms, which will give
excuse for traders to take profit and push the market lower. On economic
front, the data are relatively light next week We have on Monday the Leading
Indicators, Thursday Jobless claims and Existing Homes, Friday Consumer
Sentiment. Plus testimony by Fed Chairman Bernanke on Tuesday. The Fed
Chairman statement may be more influential to the market than the economic
data." Well despite market expectation of a pull back correction, DJIA
continued to charge higher and it was now 11 days closed higher out of the
past 12 days! We also said that, "As for STI, although a continue rally is
possible, there could be some form of correction in early to middle of the
week. However any correction will be strongly supported at 2350 and may lead
to another stronger rally by end of the week or next week." Again thought
there were some pull back, they were very shallow and STI continued to
charge up. So, are we expecting some correction this week? Or the market
will continue its upward marching?
Well the market has certainly
reversed from its June-July correction and is now heading higher, this could
be easily seen from the chart above. We believe DJIA may have a bit more
upside in the early part of the week and should start its correction by
middle of the week. However, don't expect a long lasting correction, instead
we are expecting a sharp and short correction before the next impulsive
rally emerge. So unless you are determine to buy on the correction and take
action fast, you may end up missing the boat again. For this week, we
have a few important corporate results announcement, namely Verizon
Communications, Exxon Mobil, Walt Disney, Honeywell, Rockwell Automation and
Travelers Companies. On economic data, we have Monday's New home sales,
Tuesday's Case-Shiller home prices and Consumer Confidence, Wednesday's
Durable Goods Orders, Thursday's Jobless claims and Friday's GDP and Chicago
PMI. We also have Treasury sales this week. The Consumer Confidence, Durable
Goods and Treasury sales are the likely data that will move the market.
Expect market to move slightly higher on early part of the week, but should
start its correction by middle to end of the week. As for STI, expect it to
challenge the resistance at 2604 and if breaks may move up to 2700. However,
the upside is now limited and a correction may come by middle of the week. For
Intermediate investors, we would expect you to have established your long
positions last week in according to our advise. You may continue holding it
for a few more weeks. As for short term traders, perhaps it is time to take
some profit in the early part of the week.
Dow Jones Hang Seng
Nikkei
Resistance 9280
20400 10170
Support 8840
19160 9500
As for STI the resistances and supports
are as follow:
Resistance: 2580, 2604, 2700
Support:
2500, 2465, 2424, 2371, 2350, 232
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 corporate result announcement from Verizon Communications, Exxon
Mobil, Walt Disney, Honeywell, Rockwell Automation and Travelers
Companies.
-
The economic data include Monday's New home sales, Tuesday's
Case-Shiller home prices and Consumer Confidence, Wednesday's Durable
Goods Orders, Thursday's Jobless claims and Friday's GDP and Chicago
PMI.
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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