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N.B. Above Chart is abstracted from
NextView Program
Markets are now reaching a cross
juncture. On one hand, we had DJIA finally managed to move into new high, in
line with other major indexes such as Dow Transportation and S&P 500, these
have created a confirmation and all clear signals for the bull to continue
charging. On the other hand, we had markets moving up on light volume over
the past two weeks and they are now at very over bought situation. A big
sell off from here will probably be classified as false break in DJIA and
that we are heading for a big correction that should drop below the recent
low. However, if the pull back is shallow, this could be taken as a mild
correction before the bulls come in and charge again! While we remain
favoring a big correction in the coming weeks, we are not 100% sure and
would prefer to wait for the market to tell us its direction. Next week's
bigger moving events could be from Sunday's voting on Healthcare plan,
Tuesday's Existing home sales, Wednesday's Durable goods orders and New home
sales, Thursday's Jobless claims and Friday's Consumer sentiment. And since
India had up its rate last Friday, any potential raise on other big nations
may have some impact to the market too. The decision on rescue plan for
Greece on the coming week (Greece has set this as the dead line), could also
influence the currency and stock markets. With most of the good news already
build into the market over the past two weeks and that market is over bought
now, the odd is favoring the down side. The big question to ask is, if this
pull back going to be just a small correction OR a big degree sell off that
will eventually see DJIA below 9000 level, we need to wait for a clear waive
development before we can have a clearer vision. On technical perspective,
if DJIA breaks below 10650, it would be the first sign of prolong
correction. However, if it can continue to drop below 10500, the odd will
greatly increase that DJIA will revisit its 5th Feb low of 9835 and likely
to go lower. Similarly for STI, it needs to break below 2900 for a bigger
correction. And if it continues to drop below 2800 the chances is high that
STI will revisit its 8th Feb low and go lower! So stay tune, perhaps next
week will give us a clearer clue as to what the intermediate term direction
is. As such, for Intermediate investors, you should stay short and
wait for confirmation. You may place your stop loss at 2950 and above. As for short term traders,
perhaps it would be better to wait for a clearer direction before jumping
in.
Dow Jones Hang Seng
Nikkei
Resistance 10820
21700
10900
Support 10650
21000
10550
As for STI the resistances and supports
are as follow:
Resistance: 2930, 2947, 3000
Support: 2900,
2850, 2810, 2772, 2760, 2727, 2700
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 Existing home sales, Wednesday's
Durable goods orders and New home sales, Thursday's Jobless claims and
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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