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N.B. Above Chart is abstracted from
NextView Program
There will be
no update next week ..... Happy Chinese New Year!!!
Last week we said that, "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." True enough, DJIA did attempt to
rally in the early part of last week, but was failed to impress and was
subsequently make a big drop on Thursday and Friday towards the
psychological 10,000 level. We also said that, "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." Again, we were right to the dot! STI closed at
2683 last Friday, very close to the week low! So what could we expect next
week? Will there be a rally since market is very oversold?
Last week was a typical bear market
drop, whereby on the early part of the week the Bulls were attempting to
push up the market on oversold situation, unfortunately the rally was weak
and was eventually given way to another big sell off. The situation could be
the same for this coming week, whereby market will attempt to rally on the
basis that market is deeply oversold (actually is not very true, as early
last week the oversold had been corrected in some degree.) However, when
DJIA reaches the psychological level of 10,000 and S&P reaching its 200 EMA
support, a rebound is inevitable. Which explain why USA market had a last
hour rally last Friday. The question now is, will this rally be lasting or
just another one or two days affair, follow by another big sell off. We
believe the sell off will continue. Next week will start with a G7 statement
on the weekend meeting, follow by Tuesday's Wholesale Inventories, Wednesday
Trade balance, Thursday's Jobless claims and Retail Sales, plus Friday's
Consumer Sentiment. Again, looking from the economy data, it seems
that Thursday Retail Sales will be the bigger mover. As such, we may expect
some bounce in early part of the week, before another sell down by mid to
late next week. Not to forget, we will have long weekend (Chinese New Year
days) next week, which will discourage investors to hold shares for over the
long weekend holidays. As such it would be advisable for investors who have
caught long in the process, to liquidate the shares during the rebound. As for STI, it
may go sideways consolidation for the early part of next week, but will
likely go down again towards middle to end next week. The index could
eventually test the 2600 supporting line. 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 10267
20500 10450
Support
9900 19200
9950
As for STI the resistances and supports
are as follow:
Resistance: 2719, 2730, 2763, 2790, 2850
Support: 2680,
2630, 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.
-
The economic data include Tuesday's Wholesale Inventories, Wednesday
Trade balance, Thursday's Jobless claims and Retail Sales, plus Friday's
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.
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