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N.B. Above Chart is abstracted from
NextView Program
Hello to all my fellow supporters
and wishing all of you a very good 2010 New Year! First, I would like to
apologize for missing in action for nearly three months. Nevertheless it was
a good break for me and I am glad that I am still in one piece. Second, the
good news is this weekly commentary is back in action again, and shall
continue for the year 2010 and beyond .......
Now ..... back to business. Last
year was indeed a very good year for investors and brokers. In fact, I would
say it was well exceed our expectation. Will this year continue to be like
what last year brought to us, personally I have some doubt of it. However, I
am pretty certain, we are heading to a very volatile year for the stock
market. So, prudent and cautious trading/ investment may be the key to
survive. As you may see from the above STI Weekly chart, we are again at a
crucial juncture and that for the next couple of weeks, the battle between
the Bull and the Bear may become more ugly and that a winner may emerge
soon! Starting next week, USA corporations will begin their 4th quarter
results announcement. Will this end up to be the turning point for market
direction? It is certainly possible. Considering that most of the cost
cutting measurement in the past year would have been build into the company
performance, the coming results will need to be solidly back by increase in
revenue to convince investors that the growth path remain strong. Failing
which, a sell on fact may sit in and that could be the trigger point for the
next big correction, considering that the market had not been seriously
corrected since the bottom in Mar'09. From technical perspective, the odd is
also favoring down side. First, despite a continue 5 days rally in S&P in
this new year, the breath and volume were not impressive. Second, both DJIA
and S&P are now at their major resistance (be it 50% retracement or hitting
major down trendline). Third, momentum indicators start to shown divergence
(some may be even triple divergence), which suggesting that a turn down may
be coming soon. Fourth, many Bears have been badly injure over the past few
months, for the market continued to rally and shorting was like killing
themselves. It has now reaching a point whereby the Bears have completely
lost faith in shorting and many of them have forgotten how to short!!
Another area worth taking note is on the major action for funds in January.
Last year was a tremendous good year for most of the funds, however most of
them may not liquidate their position to avoid heavy capital gain tax.
However, if market is unable to rally on good news for the next two weeks,
they may decide to sell down and take the profit first. After all the year
is still young, they can always buy back later at a lower price! For next
week, there are no major economic data, so may not have any surprise comes
out from there. However, starting from Monday we have Alcoa, follow by
Thursday's Intel, Friday's JP Morgan announcing their results. And then the
week after next will have more bigger corporations and banks announcing. We
would certainly expect a very volatile market, for most of the analysts are
beginning to demand better results. My hunch tell me that, this could be a
turning point for the market, so do be careful! We believe if DJIA does
break below 10200, the market may be turning down eventually, so do pay
attention to this level. Also if Hang Seng index breaks below 22000 or
Shanghai index breaks below 3040, these could be another early sign of a
down turn. As for STI,
a break below 2890 will be the fist sign of turning. Follow by a break below
2850 will confirm the down trend! For Intermediate investors, you may want to
square your long positions and wait for the next clearer direction before
putting up your next bet. As for short term traders,
perhaps it would be better if you want to stay in the market, may be penny
stocks will remain active for if there is any down turn it would surely lead
by blue chips.
Dow Jones Hang Seng
Nikkei
Resistance 10827
22550 11000
Support 10200 22170
10650
As for STI the resistances and supports
are as follow:
Resistance: 2932, 2945, 2950, 3000
Support: 2910,
2900, 2880, 2860, 2850
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, starting Monday we have Alcoa,
follow by Thursday's Intel, Friday's JP Morgan.
-
The economic data include Wednesday's Beige Book, Thursday's Jobless
Claims, Retail Sales 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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