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N.B. Above Chart is abstracted from
NextView Program
Last week we said that, "To all my customers and fellow
supporters who had followed my advise two weeks ago on my first write out on
this year weekly commentary column, I believe all of you are in very good
shape by now. Indeed this is just the beginning, I am sure there are more
downside room to go, so stay short and make good money! This week will be
very volatile for the stock market. For the Bulls will attempt to fight back
and try to gain back some ground, before they realize that the game is over
and it is time for the Bears to perform in the stage. There are 12 members
of DJIA component stocks and 130 companies in the S&P 500 to announce their
result this week, such as Du Pont, Boeing, Caterpillar, Chevron, Microsoft,
Apple, Yahoo and Amazon. Judging from past two weeks reaction (sell on
announcement of results), the market is certainly favoring the downside. We
also have a serious of important economic data in the pipeline, starting
from Monday's Existing home sales, Tuesday's Case-Shiller home prices and
Consumer confidence, Wednesday New-home sales and FOMC meeting announcement,
Thursday's Jobless claim and Friday's GDP and Employment cost index. All
these could move the market one way or another. In addition, there are a few
central banks making their Interest Rate decision next week, plus Obarma's
state of the union address and the possibility that Fed Chairman Bernanke
won't get his confirmation vote, all of these events will add on more
uncertainty to the market. Technically, all global indexes had make a major
down turn last week, with many indexes broke their respective up trendline
and important supports. To me this is a change of direction and is likely to
take months before any possible of returning back to the bull market again.
Although there are market view that the current sell down may develop into a
depression type of Bear market, where DJIA heading to much lower that Mar'09
level. Thought it is not completely impossible, I would rather take thing
one at the time and treat the current sell down as a correction that may
last for at least a few months. I will only reassess the potential of
depression type of Bear market in a few months time. Expect next week to be
very volatile, the market could be experience some rebound on Monday and
Tuesday, but will soon give way to the sell down again by end of the week.
For DJIA any rebound will be capped below 10500 and will eventually break
the 10000 level in one to two weeks time." True enough, last week proved to
be a volatile week, where the Bull and the Bear were busy fighting to gain
their respective ground. By the end of the week, it seems that the Bear has
gained a better ground than the Bull! We also said that, "As for STI,
rebound may come early next week and would not be lasting. Any rebound will
be capped below 2850." Again we were right to the dot! While STI did try to
make a rebound over the week, the rebound was rather mild and at the end
closed near the low on Friday. So, what could happen next week? Will there
be a continue rebound or another big sell down is on the making?
To me last week was the ideal time
for the Bull to fight back and regain the ground. Unfortunately they had
failed to do so, which make them more difficult to reinstate their ground in
this coming week. If by the middle of this coming week, the Bull is still
unable to make a significant rebound, the next big move is clearly another
big sell down! The January month had now passed by, and it was a clear down
month, with DJIA -3.46%, S&P -3.70% and NASDAQ -5.37%. Like most analysts
said, what happened in January will end the year on the same note. So, if
this is correct, the year 2010 will definitely be the year for Bears! Let's
monitor closely and keep our eyes open. For this week, we will have another
peak week for the results announcement. There will be 3 Dow components and
94 S&P companies announcing their results this week, such as companies like
Cisco, Exxon Mobil, UPS, Time Warner and Pfizer. However, judging from the
past three weeks reaction, the result announcement seem to have more
negative bearing than positive impact to the market. As such, the economic
data may be more important to the market direction. For next week we have,
Monday's Consumer spending, ISM, Tuesday's Pending home sales, Wednesday's
ADP employment, Thursday's Jobless claims and Friday's the all important
Unemployment data! Judging from the economic data schedule, there is likely
a big move by middle to end next week! On Technical analysis perspective,
market seems to be oversold. However, it was oversold in the beginning of
last week, but each time there was a rebound it was followed by a quick sell
down. So in actual fact, the oversold had been corrected for some degree
over last week. If there is no strong rebound in the beginning of next
week, by middle to end next week, the Bulls will have to hid away and the
Bears will rule the market again. In other word, if there is no strong
rebound in the early part of next week, the market is likely to face another
big sell off by middle to end of the week. In such case, the important
support eg. DJIA trendline support and the 10,000 psychological level will
give way, and the drop will be devastating! The odd of such events happening
is certainly very high, giving what had happened last Friday, where DJIA
opened +100 pts but ended -53 pts, closed near the low! For DJIA, a break on
10,000 psychological level, will lead to a big fall towards 9500 without
much pausing in between. We believe next Friday unemployment data may just
be the event that will kill the market. As for STI, it seems to be
going on a sideway consolidation, once it breaks below 2719, there will be
another big sell off emerge. As
such, for Intermediate investors, you
should continue to hold your short positions. As for short term traders,
perhaps it would be better to trade on the short side for the coming weeks,
for the long side may be more difficult and subject to possible trap on
your positions.
Dow Jones Hang Seng
Nikkei
Resistance 10250
20440 10450
Support 10000 19900
10000
As for STI the resistances and supports
are as follow:
Resistance: 2763, 2790, 2850, 2883, 2900, 2932, 2945, 2950
Support: 2730,
2719, 2680, 2600
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, such as Cisco, Exxon Mobil, UPS,
Time Warner and Pfizer.
-
The economic data include Monday's Consumer spending, ISM, Tuesday's
Pending home sales, Wednesday's ADP employment, Thursday's Jobless
claims and Friday's 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.
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