 |
N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "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." Indeed we were right to
the dot! DJIA did make a new high last Thursday and started its correction.
We also said that, "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." Again, we were right that
STI had cleared its resistance at 2604 and was heading higher towards last
Friday closing. So, will the market continues to go up OR a correction is
coming? What should be the right strategy to apply under current
environment.
Well in our opinion, the USA market
had started its correction since last Thursday and could carry on for at
least one week. How low the correction can be and in what form we do not
have a clue. However, judging from the bullishness in current market
condition, I would not be surprised to see a sharp drop to shack away the
weak Bulls before the market resumes its upward surge. For next week, the
focus will be on economic data, especially the employment data for it will
determine whether the recovery can be sustainable. For the coming week, we
have on Monday the Institute for Supply Management on manufacturing activity
in July and Domestic Auto sales. On Tuesday personal income and personal
consumption. On Wednesday, the ADP employment survey and factory orders. And
of course on Friday, we have the all important Unemployment data! The ADP
and the Unemployment data will probably be the major market mover next week.
While there are continue to have corporate results announcement, most of
them would not affect the general market as a whole. Expect market to
continue coming down in the early to middle of the week. As for Friday, even
if the job data is bad, the market may experience a sharp drop but should be
recovered fairy soon. As such we remain bullish in the coming weeks and
would add on to our long positions if there is a big dip in the market. As for STI, expect it to
start coming down in early part of the week and it will turn quiet after
Wednesday ahead of long weekend holidays to celebrate the National day. How
far the correction can be, is still debatable. However, there is a high
chance the correction can reach 2480 level. For Intermediate investors, we
would expect you to have established your long positions two weeks ago in
according to our advise. You may want to take partial profit and prepare to
jump in fully again after a correction emerge. As for short term traders,
perhaps it is time to take some profit in the early part of the week and can
even consider shorting the market.
Dow Jones Hang Seng
Nikkei
Resistance 9260
20700 10400
Support 9133
19955
10067
As for STI the resistances and supports
are as follow:
Resistance: 2680, 2700, 2750
Support:
2604, 2580, 2500, 2465, 2424, 2371
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 announcements.
-
The economic data include Monday the Institute for Supply Management on
manufacturing activity in July and Domestic Auto sales. On Tuesday
personal income and personal consumption. On Wednesday, the ADP
employment survey and factory orders. And of course on Friday, we have
the all important Unemployment data.
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 |