trendlines

S&P500 powers into 1300 range

2011-06-29T10:17:00.000-07:00

The S&P500 index found support at the 200-day moving average, as suggested in my last post, and has powered above the sticky 1297 level. This a short-term bullish development, and may carry enough momentum to target 1335, possibly with a pit-stop around 1315-1320 range. Very short-term, indicators are overbought, and may result in a back-test of 1297, or sideways action.

Shanghai Composite Short-Term: Positive Divergence

2011-06-22T00:22:00.000-07:00

Just a quick note to highlight the positive divergence in the Shanghai Composite, as well as the Shenzhen Index. In recent past, such divergences have resulted in a significant rebound. The upside target at the moment is capped at 2750 for the SSEC, and 1135 for the SZSE. However, as noted in the previous post, if the medium-term triangle pattern was indeed broken last week, i would be careful with any longer duration trades at this stage.

Shanghai Breakdown, Hang Seng Update

2011-06-19T08:56:00.000-07:00

Shanghai Composite broke down through the bottom line of the big triangle. Although oversold short-term, this is a medium to long-term bearish development. Immediate support is around 2580. We will have to monitor if the break holds over the next week or so, and derive reasonable targets for the downtrend if it develops.

Similarly, Hang Seng has broken below the 22400 level outlined in the earlier post and deteriorated rapidly. Currently oversold with a weak RSI divergence and sitting on the bottom of the channel. Looking for a rebound to test the 22400 level in the short-term

S&P500: Reaching 200-day Moving Average

2011-06-16T00:49:00.000-07:00

The S&P500 is reaching the 200-day Moving Average(green) around 1250. Coupled with the previous low(labelled a), it is a likely region for a bounce. In case of a failure, good support is the previous high of 1220. Note the suggested corrective wave count, implying possibility of further upside in the medium-term. For now though, any upside should be limited to 1300 range.

Singapore Exchange & The Straits Times Index

2011-06-15T08:37:00.000-07:00

SGX - Set for a bounce?

Previous posts on the Singapore Exchange (SGX), speculated on my bearishness on the merger as well as the stock price.Since my last post noting a break in the uptrendline for SGX, prices have declined, attempted a back-test, and declined again. A technical bounce is likely for the SGX here, around $7.20. Supporting this view are the declining volumes and the RSI divergence. A sustained break below this level on increasing volumes will negate this play. Upside is limited to the $7.70 pivot initially, or the downtrendline(blue) whichever comes first.

STI - At support, but no reversal signals yet

On the other hand, the Straits Times Index (STI) has not thrown up any reversal signal yet. But price is at a decent support level here at 3040. With weak global cues going in the summer holidays, it remains to be seen if STI can muster enough buyers to move up towards 3120. Further support is as shown on chart.

All the best!

Hang Seng Index: Reaching Friendlier Grounds (22,400)

2011-06-08T01:18:00.000-07:00

The Hang Seng Blitzkrieg upwards from two weeks ago, met with stiff resistance at the Russian front. Confined to its range, the HSI got beaten back to friendlier territories around 22,400 - a formerly reliable support level. Can it reload and resume it's campaign upwards, or will we see a Normandy-style rout and capitulation? This level is key. With Shanghai starting an oversold bounce, will the HSI follow? Watch the panzer divisions (big hands) for clues.

(Video) Fight of the Century: Keynes vs Hayek

2011-06-02T09:39:00.000-07:00

Part 1

Part 2

Shanghai Composite: On Life Support

2011-05-30T06:36:00.000-07:00

"Charging Defibrillator - Stand Clear. One, two, three... Clear!" Shanghai Composite has gone critical in the past few weeks, approaching the bottom trendline of the very large triangle illustrated in older posts. This uptrendline coupled with the 2650-2700 zone might very well be the Life Support it needs. Looking for a rebound here back into the safe zone upto around 2830, and possibly the upper trendline later. An eventual break either way out of this triangle, will be the difference between a rehabilitation or a coma. Like a good doctor, continue to monitor the vital signs - price action, volume, oscillators and trendlines.

SENSEX: Reaching Support Zone

2011-05-26T01:36:00.000-07:00

Bombay SENSEX is reaching oversold levels on the daily, while approaching the support zone between 17400-17800. Expect to see some kind of rebound here in the short-term. It is too early to call an end to the correction here. Further updates will be posted as the chart develops.

Hang Seng Index: Trendline Watch

2011-05-26T01:26:00.000-07:00

HSI has stayed in range since the last post, in which a possible breakout was suggested. Respecting 24500 to the upside, while drawing support from 22400. Hence a nice trade will be in play once it breaks either side of this range. In the very short-term, HSI is oversold on the daily with a slight divergence, suggesting a rebound rally of sorts(which has already begun.) Also of interest is the lack of volumes on the recent decline.

S&P500 Failed IHS & Downtrend Channel

2011-05-26T01:02:00.000-07:00

Not long after the last post, SPX broke below the proposed 'neckline', and hence invalidated the Inverse Head & Shoulders.This is a bearish development. The only consolation for the bulls is that the downtrend remains in a Corrective channel, and has not yet developed Impulsive characteristics. In the last few sessions, a positive divergence developed on the hourly, resulting in a relief rally.

The good news for the bears is in the chart below. The recent declines also broke the uptrendline of the rising channel (blue).

Can you count 5 waves up from Jul-10? As outlined in an earlier post on the DJ World Index, are we staring at an end of this uptrend? For a downtrend to take root, selling activity needs to pick up pace right here with better volumes.

For the moment, short-term upside is capped around 1330. A continuation of the uptrend requires a break above the downtrend channel.

S&P500 IHS Update

2011-05-13T21:48:00.000-07:00

The previous post on the S&P500 identified an Inverse Head & Shoulders pattern with a target around 1430. Also suggested was the dangerously overbought condition short-term, and the possibility of a back-test. Since then, price has whip-sawed in a corrective downward pattern, and is poised crucially. Here's the updated hourly chart.

As you can see, price has managed to stay mostly above the neckline, and is now poised at the uptrendline connecting the prior lows. The indicators offer no help as to the direction at the moment, but if we are to keep with the trend in place, expect a sharp move up towards 1430, to validate the IHS. Alternatively, a breakdown below the neckline, invalidates the IHS & sets up a bearish picture.

All the best!

S&P500 Inverse Head & Shoulders: Target 1430

2011-04-30T06:35:00.000-07:00

That's a pretty neat-looking Inverse Head & Shoulders (IHS) Pattern on the hourly! Although a IHS pattern is seen more often at bottoms of downtrends, they do occasionally turn up uninvited. A target of 1430 can be calculated based on the chart. Severly overbought on short-term charts, there is a danger of a pull-back, and hence chasing price here would be unwise!

Itching to get LONG?

If you are not long already, wait for a successful back-test of the neck-line, or at least a pull back to wind down the RSIs. That will enable employment of appropriate stop-loss points in the event of a failure.

Significant TOP around 1430

Last update, we talked about dangerous levels of BULLISH sentiment, as a contrarian indicator. Take a look at the weekly chart above. I believe we are approaching a significant top around 1430. There are three reasons to support this proposition:

1. Inverse Head & Shoulders Target level as shown above
2. Serious congestion zone from 2007-2008, just before the wave 3.
3. A Fibonacci 1.38 extention level is reached at this level

All the best!

Shanghai Composite: Retreating towards 2850

2011-04-28T19:22:00.000-07:00

Shanghai Composite hit the upper trendline of a broad triangle pattern (refer to previous post), and promptly turned down. Selling has picked up pace somewhat,but has support around 2850 - a level also supported by the rising trendline, as shown on chart. In the event of a bounce, resistance lies around 2950. We will review this picture in case of a break towards 2650.

S&P500: Sentiment fires a WARNING shot!

2011-04-16T20:45:00.000-07:00

As the S&P500 wavers at rally highs, bullish sentiment is reaching dangerous levels. Even if not an immediate sell signal, further price rises will be hard to come by until the bullish sentiment subsides substantially. Here's the SPX500 trendline watch, as well as the sentiment chart.

Shanghai Composite: A BIG Triangle = A BIG Move ?

2011-04-10T07:58:00.000-07:00

Since its dramatic recovery in Wave A, the Shanghai Composite has been stuck in sideways action for almost 2 years in B-wave action, providing good short-term trading opportunities. We've talked about a possible truncated Wave C in previous posts. Meanwhile though, a BIG fat triangle has set up, and price is currently approaching the very important top line. A break above will have immediate resistance around 3180, but in the longer run could lead to much higher prices in an overdue Wave C. In case of a turn-down, support is at 2650, followed by bottom line. Eitherway, we may be looking at a BIG move, and hence patience is a virtue!

Hang Seng Index: Consolidation before a Breakout?

2011-04-02T20:37:00.000-07:00

Since my last post Hang Seng Index: Break Down!, HSI has successfully held support around 22400. Looking at the weekly chart, the index has seen sideways action for the past 5 months, and is reaching the upper trendline resistance yet again, around 24000. We may see some consolidation here. However, the volume patterns suggest that a breakout above is possible in the short-medium term. Intial target will be 25000, followed by the significant pivot of 26300.

Straits Times Index: Facing a Familiar Foe!

2011-03-30T18:59:00.000-07:00

After a rapid recovery from an oversold positive divergence, the STI is now facing a familiar foe: 3120. Also in play is the top of the downtrend channel. Interestingly, the decline in the STI has occured in 3 waves so far. A break above 3120 here, will mean at least a re-test of the highs in the medium-term. On the other hand, a breakdown to reach 2900 will complete 5 waves, and change the outlook decisively.

DJ World Index: Through the Elliott Eye!

2011-03-20T00:14:00.000-07:00

The world has had an incredible year so far, with misfortune striking many diverse populations, in the form of natural disasters. I believe it is our duty to lend our support, relief and prayers to those affected, to the best of our abilities.

Are we about to witness a financial disaster as well? Attached below is a chart with a simplistic view of the world index through my Elliott eye. If the labelling is foreign to you, you may want to browse through this basic Elliott Wave Tutorial. If you use a magnifying glass, you may notice a discernible trendline break on the chart. Note that the US markets have a heavy weightage in this index.

The question is: Is the C wave done? or was this 1 of C?
The nature of the decline that is currently unfolding might give us some clues. Assuming the most bearish case, i have drawn a projection of the possible path the world markets could take.

Big Picture

Since markets are fractals, any form of wave labelling requires the big picture count to be accurate. You may want to check out Robert Prechter's free copy of the February Elliott Wave Theorist for the US market picture, if you haven't already done so. (Available until Mar-21)

Asian Markets - baked in the same oven?

Although all world markets have general correlations, not all of them are in the same wave junctures. Some more bullish than others. For the Asian Markets big picture, you may want to check out the Asian-Pacific Financial Forecast service, by the brilliant Mark Galasiewski.

Very Short-Term

In the very short-term, most markets seem to be a few declines away from a short rebound into the next few weeks, which will serve as a back-test.

All the best!

Elliott Wave Theorist, FREE until Mar-21

2011-03-16T02:22:00.000-07:00

In response to the dramatic selloff in recent days, Elliott Wave International has released a free issue of Robert Prechter's Elliott Wave Theorist. EWI says:

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Shanghai Composite: Breakout Fails

2011-03-15T00:16:00.000-07:00

Refer to last post on SSEC. A breakout above 2950, implied a target of 3180 after a brief back-test. However, the back-test failed (perhaps in sympathy with the extraordinary & unfortunate situation unleashed by mother nature in neighbouring Japan), and the short-term outlook is back to neutral. Supports are at 2850, then 2800. A break back above 2950 on good volume will give strength the bullish case.

Straits Times Index: Overhead Resistance

2011-03-08T23:55:00.000-08:00

Last post on the STI - Dire Straits - identified a break below 3120, and called for further declines. After reaching a low of 2970, there was a nice rebound. The same 3120 overhead is now serious resistance. Expecting price to correct with support at 3050 zone. A possible inverse head and shoulders reversal pattern is illustrated on the chart. An eventual break above 3120 will make this an A-B-C style correction implying higher prices ahead.

S&P500 Short-Term: Update

2011-03-07T18:39:00.000-08:00

Refer to previous post, suggesting a short-setup on SPX. Although, the 30-min RSI never made it to 70, price moved down swiftly, taking the lower trendline downriver. Around 1300 support, a nice back-test followed. If you've taken a short position, move your stop down to the back-test level to protect your profits. Failure of 1300 zone may result in 1275. This move down, if it happens, is likely to be choppy.

Shanghai Composite: Upside Breakout!

2011-03-06T23:46:00.000-08:00

Last update on the Shanghai Composite noted resistance at 2950. After a decent correction, SSEC jumped up 1.8% today on good volume, and breaking out above this barrier. Target for this move up is 3180. But first, there may be a back-test of the breakout. Also, the medium-term picture will get very interesting around the target levels. Stay tuned!

(Video) Quantitative Easing Explained!

2011-03-05T07:26:00.000-08:00

S&P500 Short-Term: Bearish Wedge

2011-03-04T23:25:00.000-08:00

Not to swing at every pitch requires a lot of discipline. If one takes only the best setups, with a safety margin, one can't go too far wrong. (Sounds like value investing, doesn't it?!) The S&P500 maybe providing a short-term bearish opportunity. First, here's the Daily chart:

My last update noted a trendline break with support at 1300, and suggested that we might see a shorting opportunity. Since then prices have whip-sawed impressively, and failing at the back-test of the broken trendline. Thus resulting is what could be a bearish Rising Wedge, as shown on this 30-min chart.

Top of the wedge is at 1332, bottom is the rising trendline. A break eitherway could be bullish/bearish. But Elliott Wave Theory suggests that after an impulsive decline and a corrective upmove, there should follow at least another impulsive decline.

Strategy:

1. Taking a short-position at the top of the wedge, with RSI close to 70 on the 30-min chart(for margin of safety), with a suitable stop just above. In case of decline below the lower trendline, looking at a target of around 1275.

2. In case of a break above the wedge, i won't be taking any long positions until clear of recent highs.

Apple iPad2 Poll: Fibonacci in Action!!!

2011-03-02T06:59:00.000-08:00

Was just browsing and in this poll on MW, the respondents exhibit an almost perfect Fibonacci ratio (Golden ratio), in response to the question! An almost perfect 61.8-38.2. A Coincidence you think? Or is it the law of nature in action? Keep in mind that the poll does involve a big "herd" of respondents, and it does involve speculation!!

Asia: Some Bullish Breakouts UPDATE

2011-02-28T08:26:00.000-08:00

Refer to this earlier post entitled, Asia: Some Bullish Breakouts!, wherein some leading asian indices were highlighted, when they achieved breakouts to new highs. They have regressed enough to cancel the long trades. Moreover, all three charts have violated the uptrendlines, implying more corrective action ahead. Once again, this case highlights the importance of a stop-loss strategy before embarking on a breakout trade. Here are the updated charts, with suggested support levels.

1. South East Asia

2. Malaysia KLSE

3. Korea KOSPI

Singapore Exchange: Breaks Medium-term Uptrend

2011-02-24T05:57:00.000-08:00

SGX breaks medium-term uptrendline, and also the 200-day MA. This is bearish action. Currently around $8.00 round number, and may offer a back-test of $8.25. Next significant support is coming in at $7.70. As SGX did not break downtrendline since my last post, no long position was taken. For those who did, i trust that stop-loss strategies were used!

S&P500: Trendline Break!

2011-02-24T05:15:00.000-08:00

In my last update around 1325, we discussed the possibility of a correction upon hitting the upper trendline. After threatening to break above it, SPX has crash-dived lower and in the process breaking the lower trendline. The degree of this decline is anybody's guess at the moment. Near-term, we have support at 1300 followed by 1275. Expect an oversold bounce to back-test the line, which may provide a shorting opportunity. Also note the location of the 50-day MA.

Shanghai & Shenzhen Update

2011-02-17T06:52:00.000-08:00

Reaching Resistance Zones

Last update on the Chinese indices noted bullish breakouts, and i took positions short-term. Both indices are now reaching resistance zones, and may be vulnerable to a pullback here. Support for the SZSE is around 1230. A breakout above these zones will test recent highs. Note the increase in volume with the price. Will post bigger-picture chart when time permits.

All the best!

Shanghai Composite

Shenzhen Composite

"Elliott Wave Principle": FREE online edition

2011-02-17T03:56:00.000-08:00

Bob Prechter is releasing the online edition of Elliott Wave Principle: Key to Market Behavior, FREE to the public. This brilliant book is my trading bible, and i would strongly recommend anyone interested in trading or market psychology to have a go at this. Trading is an art (not a science). The general principles of Elliott Wave Theory are immensly beneficial to understading market moods, as well as in shaping a trading framework, in my humble opinion.

Click here to access the resource. You may have to sign up for a Club ID, which is free. I trust you will find this useful :)

Singapore Exchange: Decision Time

2011-02-15T08:59:00.000-08:00

SGX has been drifting in a range since the merger-euporia-rally, and the high volume fall. From the arithmetic chart below, it is evident that a move eitherways in required. Currently sitting on previous support of $8.25 and the rising trendline, with the 200-day MA not far below, chances of a bounce here outweigh a decline - by a bit. I may go long here, with a suitable stop.

Upside targets: $8.70 initially, followed by $9.20
Downside support: 200-day MA initially, followed by $7.70

Remaining bearish on the long-term picture as well as the merger. All the best!

Straits Times Index: In Dire Straits

2011-02-10T09:48:00.000-08:00

The Singapore Straits Times Index broke down through range support at 3120 today. Since the break of the long-term uptrendline (blue dotted) - a bearish development - this move down was in the works. Initial support may be provided by the bottom of the parallel channel(pink), followed by good support in the 3040 area.

In case of further bearish developments, an eventual target of 2900 will not surprise.

Shanghai & Shenzhen: Break Up!

2011-02-10T03:34:00.000-08:00

In contrast to the HSI, Shanghai(+1.6% today) & Shenzhen(+2.9% today) seem to be breaking upwards on decent volume! In my last post, i had suggested that the decline in the SSEC was looking corrective implying a break upwards is possible. I am very short-term bullish, but still wary of the barrier at 2950 & 1235, on the SSEC & SZSE respectively.

Shanghai Composite

Shenzhen Composite

Hang Seng Index: Break Down!

2011-02-10T03:14:00.000-08:00

Last post on the HSI showed why we bounced up from 22,400. After a decent advance, the HSI turned down along with other emerging markets, and broke down through the uptrendline. However, as the index is reaching oversold towards the historical 22,400 support, expect a tiny bounce or back-test here. Further support is at 21,800. I will discuss other supports in the event of a further break below this level.

Meanwhile the Shanghai Composite is changing gears, and breaking out of its short-term downtrend. Update to follow shortly.

S&P500: Trendline Watch

2011-02-09T09:48:00.000-08:00

I was looking for a termination of wave 5 just under 1300. The very overbought SPX refused to oblige and has climbed towards 1325, hitting the upper trendline of the wedge once again. Looking for a pause or significant reversal here. In the absence of the latter, there is a remote possibility that the 3rd wave is extending. Watch for a break of either trendline. Always use stops.

All the best!

USD looking down the rabbit hole!

2011-02-05T10:35:00.000-08:00

Last update on the USD saw a breakout out of the downtrend, and a struggle up towards $81, before trending down for a back-test of the uptrendline. Looking for a consolidation between the two trendlines. A sustained break below the lower trendline is long-term bearish for the USD, and thus bullish for commodities and stocks. Watch this chart!

GOLD: At Uptrendline

2011-01-30T22:52:00.000-08:00

Was looking through some old charts, and bumped into this Gold chart. Was surprised to see Gold hit the target indicated (although the target was based on log scale). I donot trade Gold, but some of you might find this chart interesting. Price is approaching the uptrendline, with a bounce possible to retest $1400.

SENSEX: Reaching Support

2011-01-30T08:22:00.000-08:00

Sensex had a little dance at the upper channel support, before sliding down quickly towards 18200. Good congestion support here just under 18000, likely to effect a bounce at least. A sustained deterioration below this level will see 16000 area.

Strategy: This is a BUY zone, with a stop-loss at 17500.

Shanghai Composite: Trendline Watch

2011-01-30T05:44:00.000-08:00

Since my last post on the SSEC calling for a move lower, the index has fallen 8% so far, punctuated by some whip-saw rallies. The resulting structure looks like a overlapping descending wedge, suggesting corrective action so far, unless we see a sharp breakdown in the weeks ahead. A break out of the wedge may be short-term bullish, but until that happens, we're still in a downtrend.

Note that the entire decline has been on declining volume. Last couple of sessions, saw SSEC bounce off a minor trendline (maroon) on decent volume. Is this the start of a fightback? A significant support trendline (grey) exists further down just below 2600.

Short-term trade: I may be a buyer around the lower trendline, or on a break out of the wedge, with a suitable stop below my purchase price.

Are you a Trained Fireman?

2011-01-22T23:06:00.000-08:00

In response to a thread on a Singapore Value Investing forum, i posted this piece:

-----------------------------
Trading is akin to fighting fire. How are firemen different from the rest of us folks? They are highly-trained, well-protected & well-equipped. They have a strategy - a map of the building - even before they head in, and an exit plan. And perhaps most importantly, they are very brave. Even then, some perish. They know who they are, and they chose this path in life. They take calculated risks to save other peoples lives.

I will not bore you with the comparison to trading, it is pretty obvious. Now consider a civilian in his silk suit rushing into a smouldering building with no idea & no game plan? The only trait he shares with the fireman is... he is very brave, and some might say foolish. He may get lucky, but chances are he may add to the evening news count.

Contra/Margin or any leveraged trading is akin to a civilian(with the silk suit) dousing oneself with a bit of petrol, and running into that building. I exaggerate, but you get the idea!

However, before we paint trading as a mortal sin & as someone who trades frequently, allow me to share my philosophy. I consider all investing a form of trading , and thus a risk/gamble(no risk/no gain). What separates them all is the duration. Some use Fundamental data, others Technical. Both have their pluses and minuses. And then, there're also the valued techniques of gut-feel and rumours, among others.

But it takes real hard work and patience to pick solid fundamental companies in the right growth areas at the right price, just as it takes effort to pick the best chart setups, and formulate an entry and exit.

Do you know who you are in a crisis? Did you liquidate during the recent crash, when you thought you were a long lerm investor?
Have you trained yourself? Have you researched enough? Studied the risks involved?
Have you protected yourself? Holding power, Spare cash, Insurance, etc
Have you a plan before the trigger? What's a good price, a good setup? When do i stop-loss/take profits?

In short: There is a serious blaze in there. Are you a trained fireman?
---------------------------------------------
Comments?

Russell Has a Kit Kat!

2011-01-21T20:00:00.000-08:00

"Take a break, have a Kit-Kat!" Russell did.

Good support here in the 760-765 range followed by 740. The wave structure does not look complete to me. May see sideways action for a while between 765 to 807 - to get away from the upper trendline - and possibly another marginal new high around 835-850 in a couple of months time (also the all-time high).

It sure is a crack in the wall. Not taking any action.

Shenzhen Composite: Make or Break

2011-01-16T05:06:00.000-08:00

Shenzhen Composite is sitting on support at 1230. To continue the uptrend, we need a bounce here, and a break above the descending trendline. On the other hand, a break below support will be bearish, with initial support around 1130, followed by 1070. Volume cues seem to suggest that this is a bull flag, which might resolve itself to the upside, after further sideways action. My last post on the Shanghai Composite called for downside, and we have seen it unfold. Watch this more bullish brother (Shenzhen) for clues to future action.

All the best!

SENSEX: Trendline Watch

2011-01-14T21:32:00.000-08:00

Since my last update on the SENSEX, price has rebounded and stayed range-bound. In the process, a significant trendline (blue) from 2009 lows has been broken. There may be minor trendline support at current levels as indicated on the chart, failing which 18000 area should offer solid support. While the SENSEX is still in its teens, it's twin brother the KOSPI is making better progress towards adulthood.

S&P500: Approaching Multi-Year Congestion

2011-01-14T21:02:00.000-08:00

While the trend is still up, here's a multi-year chart showing significant resistance ahead for the SPX.

"Wave 1 = Wave 5" is a common relationship. Counting the 5 waves from the July lows, this gives us a target around 1295. Also note that price is approaching the upper trendline. We already talked about the very overbought oscillators and extreme bullish sentiment.

Trying to trade a top or bottom can be a deadly exercise. The more prudent approach would be to wait for a significant trendline break, before taking action with a suitable stop. All the best!

Asia: Some Bullish Breakouts!

2011-01-10T07:55:00.000-08:00

Hello folks! Here are some recent bullish breakouts in Asia, you may find profitable, if played well.

1. South East Asia - Since my last update around the all-time highs, a nice breakout - as suggested!

2. Malaysia KLSE - First time covering this index. Also a nice breakout above 2007 highs.

3. Korea KOSPI - Overtaking its maternal twin, the SENSEX, KOSPI has looked increasingly bullish and maybe about to break its 2007 highs. What Korean conflict??? Shows exactly why markets are hardly driven by news.

Strategy

As all the markets above are in overbought territory, my strategy will be to stay long these markets, and add upon corrections, with a stop loss just below the breakout levels.

Wanton Noodles in New York: HSI & SPX

2011-01-06T01:20:00.000-08:00

(Courtesy: Sparklette.net)

When in need of a fresh perspective of your city, a stroll towards a little known part of town might help. How about Wanton Noodles(above), a popular Hong Kong dish in China Town, New York?

Here's another very interesting blue(HSI) and red(SPX) noodle dish you might enjoy:

Often times, a HSI-SPX divergence provides a good hint of a short-term reversal in trend. Have a look at the past instances, and the highlighted area. Combine this with the relatively high bullish sentiment, and this DJIA chart from a previous post. What do you think is on offer next for the SPX?

Hang Seng Index: Breaks Shoulder Line

2011-01-04T09:49:00.000-08:00

Last post on the HSI warned of a possible Head & Shoulders pattern. After a false breakdown, HSI broke above the "shoulder" line in the last session on decent volume. This negates the H&S as explained in the previous post (same applies to STI), and sets up short-term bullish possibilities. However, in the very short-term, stiff resistance exists at 23900, and expect a pullback anytime to test the breakout. A break above this level may re-test recent rally highs.

In the medium-term, am looking for HSI to stay in range (no new rally highs), due to a correlation factor with US indices. I will explain this better in the next few posts.

Meanwhile, SSEC is testing downtrendline resistance, after successfully bouncing above 2700. Will be posting an update within the next few days.

NEW YEAR QUESTION: Why did we bounce on the HSI?

While the fundamental folks are busy coming up with "explanations" for the recent bounce (Chinese factory numbers, commodity prices, ben bernanke's haircut, solar flares, etc etc), here's the real reason for the bounce. Have a look at the weekly HSI chart:

Price simply hit the Uptrendline! Watch that line my friends ;)

(Video) Prechter on CNBC: "Not a bear among them"

2011-01-04T08:35:00.000-08:00

2011 & the DOW

2011-01-01T06:25:00.000-08:00

Happy New Year to all readers! May this year put you on the right side of the trade more often than not. My last post on the SPX ended on a note of caution. And here's more evidence why it might pay to be cautious. A chart of the DJIA going back 15 years.

All the best!

S&P500: Achieved Target Area.

2010-12-21T23:59:00.000-08:00

The last post, "S&P500: Wave 5 underway", more than 2 weeks ago, suggested a target of 1255 in the near term. Last session, SPX hit a high of 1256. Are we about to conclude this uptrend since Jul-10? No one can know for sure. But going by the bullish sentiment (refer to last post for chart) & overbought oscillators, it would not hurt to err on the side of caution here & take some off the table, for a short-medium term trader.

Note the slight negative divergence on the daily chart. Of course, this uptrend could continue and hit the upper line of the wedge, before it stalls. Support is at 1220 area, which was just broken out of, followed by 1175.

Singapore Exchange: Back to the drawing board!

2010-12-20T08:56:00.000-08:00

Last post on SGX, suggested a possible bounce as long as price stayed above $8.50. It didn't, and as promised i went back to the drawing board. Here's what i found. SGX is sitting on a trendline going back to the 2009 lows, and is at an important support level around $8.30. With the STI on neckline support at 3120, this is as good a place as any for a rebound. I will wait for the break of the short-term downtrendline, before initiating a trade. Resistance levels as per last post, with $8.50 level as additional one now.

A break below the uptrendline & $8.30 level could be medium-term bearish for SGX. As always, i will have a suitable stop-loss in place. All the best!

Overall, the long-term chart of SGX doesn't suggest strength so far, which leads me to theorize that the merger may not work out eventually! Time will tell, but charts do whisper and occasionally yell. ;)

Shanghai Composite: Testing Resistance

2010-12-19T10:02:00.000-08:00

Since the last update, the SSEC has been barely able to squeak out some gains on low volume, and is now at stiff resistance from the very downtrendline it broke earlier. Coupled with the 2950 historical resistance, we could see a move down lower from here. Initial support around 2700, followed by 2570. On the other hand, a break above the line on decent volume is bullish, and may lead to a re-test of 3150. Based on volume cues so far, the move down seems more likely. Here's the chart:

(Edit: Although the technical reason is clear, watch out for some fundamental explanation from the news agencies to explain the fall!)

All the best!

H&S in H&S UPDATE

2010-12-16T11:20:00.000-08:00

Refer to my last post: "H&S in H&S?", suggesting an impending Head & Shoulders short-term top in the Hang Seng (HSI) & Straits Times (STI) Indices. Here are the updated charts.

The HSI has given up on 23600 after a bit of a struggle. Note the volume spike on the last decline. As the hourly is oversold - and we're at the neckline -, a short-term bounce is possible here. A break below the neckline on higher volume, will add strength to the H&S picture with an eventual target around below 21000.

The STI seems to be holding up better, and has not yet reached the neckline. Declining volumes are not high either. However, should this change, we're looking at an eventual target around 2900.

A break above the shoulder line will negate these scenarios. Remember, H&S patterns need not always work out. Weigh the probabilities, and place your stops accordingly.

Singapore Exchange: Short-term bounce ahead?

2010-12-08T09:44:00.000-08:00

A classic case of "Buy the Rumour, Sell the News"! After SGX went vertical, it collapsed (as all parabolic moves eventually do), and is now back at previous rally high of $8.50. Coupled with the oversold indication on the daily RSI, it is a good place for a short-term bounce towards $8.80 initially, probably followed by $9.00 & $9.30. A sustained break below $8.50 at this stage will have us back at the drawing board!

As if by coincidence, expect some positive news flow about the SGX-ASX merger in the coming weeks! ;)

Shanghai Composite & Shenzhen Composite

2010-12-08T00:21:00.000-08:00

Shanghai Composite has been consolidating in a narrow range on anaemic volume, after the quick drop from 3150. The 2950 level proving to be solid resistance to the upside, while a break below 2800 might see support just under 2700. Probability of a move down is higher in keeping with the short-term trend.

As for the wave count, the bullish count is hanging by a thread. A break below 2700 will be bearish, and possibly indicating a truncation.

Shenzhen Composite (SZSE)

It might be useful to look at the other Chinese Index: The Shenzhen Composite, which is painting a more bullish picture.

Although still below its' all-time highs, it has exceeded its rally highs. After a successful back-test, it is currently in a triangle consolidation. As long as it stays above 1230 level, there's more upside ahead. Depending on your stock selection (or that of your fund manager), your performance might be closer to this index.

I will be posting occasional updates on the SZSE as well in the future.

S&P500: Wave 5 underway

2010-12-04T00:46:00.000-08:00

Last post on the SPX called for another wave up to finish this medium-term rally. Wave 4 is most likely complete with last week's sharp rally. We are now at recent highs once again, and can expect some consolidation. A breakout above 1227 will turn it into a support level instead, and offer a near-term target of 1255. Also, lookout for the upper trendline of the wedge. I will be posting the 15-year spx chart at an opportune time in the future.

Sentiment - Reason for Caution longer-term

While the rally and recovery news fills investors with optimism, it may be prudent to take a look at the longer-term picture here. If the 2008-09 decline was impulsive (in 5 waves), - and this is the view of the folks at EWI - we're currently looking at wave C of an A-B-C style rally. This is likely to be followed by another impulsive decline to re-test the lows.

Here's the sentiment picture. Compare it with the highs of 2007, and you will see that we're not far.

All the best!

Vietnam may go Vertical.

2010-12-04T00:18:00.000-08:00

The HO chi minh Stock Exchange (HOSE), after its euphoria rally of 2007 towards 1175, gave it all up in the next couple of years. As the world recovered in 2009, the HOSE rallied in Wave A to the 600 level from its low of 250, a 38% retrace. As seen in the chart, a lengthy triangular Wave B consolidation followed, retracing almost 50% of the rise. A medium-term bull market in Wave C might be right ahead, to retest the Wave A highs. Longer-term, the HOSE is in a bear market and is likely to re-test the lows. A sustained break below the lower support line will negate this scenario.

H&S in H&S?

2010-12-03T23:49:00.000-08:00

Head & Shoulders in Hang Seng & Straits Times Indicies?

Last post on the Hang Seng, called for a rebound towards 21600 based on the suggested parallel channel. That's exactly what transpired, and the index did a quick about turn as of Friday's close. The Straits Times Index is executing a similar pattern, which has potential for a short-term Head & Shoulders top. However, note that the RSIs are still relatively oversold on the daily chart, and right shoulders not fully formed in symmetry. An eventual move below the necklines, if it does happen, will offer targets just under 21000 on the HSI & around 2910 on the STI. A break above the shoulder line will negate this picture.

Hang Seng Index V Short Term: Update

2010-11-28T08:40:00.000-08:00

Last post on the HSI suggested that an impulsive decline was likely complete, & a Corrective Rebound towards 23600 was due. We did get a whimper of a rebound up to 23275 but failed to close the gap. At the close HSI breached the previous low of 22800, suggesting more downside.

However, there could be support here just under 22700 based on the parallel channel, as suggested on the chart. Also note the very short-term oversold condition. An overlapping & messy rebound towards 23600 is likely to set up the right shoulder of a Head & Shoulders pattern. Look for a break out of the downtrendline in blue, and a break above 22800 as clues.

SENSEX, Scandals & Socionomics!

2010-11-26T23:22:00.000-08:00

In my last update on the SENSEX - "Kimchi Curry, anyone?" - we were at a cross-roads. Along with its maternal twin, the Seoul KOSPI, the index looked vulnerable for a correction. Instead, the Sensex took off to test all-time highs, with the Korean brother not far behind. The test failed & a sharp correction ensued. Price is just about to reach a significant trendline around 18,800 (as highlighted in the chart), with promise of a short-term bounce at least. Upside capped by congestion at 19,800.

Wave Count & Supports

In the longer-term, it is possible that we have finished 5-waves up since 2009, as illustrated on the chart above. If so, we are potentially looking at a bigger & longer correction here. Possible fibonacci retracement levels - 23.6% & 38.2% - are roughly at 18000, and 15600 respectively. They are also strong historical support levels and thus great buying opportunities!

Alternative Bullish Count: Waves 3 & 4 could be nested i & ii waves in an extended wave 3. In this case, we may not see 18000, and the SENSEX may continue higher to all-time new highs from here, Jakarta style!

Sensex, Scandals & Socionomics

According to the emerging field of socionomics, stock market prices are the result of the social mood of the population in question. During periods of negative social moods (bear markets), some of the biggest scandals & frauds are unearthed. There are countless examples in history, with the most recent high profile case of 'Bernie' Maddoff.

"India has been rocked this year by a series of corruption scandals that have embarrassed the ruling Congress party, rattled markets and delayed reform bills as the opposition stalls parliament. "... Read more. All during the recent attempt of the Sensex to get out of the bear market slump, and picking up steam during the recent declines. Feel free to research & point out any other examples in other parts of the world. You will be suprised how predictable these outbreaks can be.

All the best!

$USD breaks out of downtrend

2010-11-24T17:40:00.000-08:00

The US Dollar index has broken above its downtrendline, but is being pegged down just under resistance at $80, as suggested previously. A break above this level would be bullish with a target of $84. At the same time, it seems to suggest continued weakness in commodities and equities, in the near future.

Hang Seng Index, Short Term: An Impulsive Decline

2010-11-23T05:37:00.000-08:00

With today's 600-point decline to the 22800 level, HSI has completed what-looks-like a 5-wave decline, or in 'Elliott speak', an Impulsive Decline. It has now reached the most recent support area, and thus a likely point for a Corrective Rebound towards 23600-23800 level, which might materialise in a 3-wave overlapping format. Feel free to browse the Elliott Wave tutorial under 'Education & Resources' if the terms intrigue you. Here's the daily chart:

Head & Shoulders

If the above is indeed a 5-wave decline, principles of Elliott Wave Theory dictate that some form of corrective upward action is due, before another decline to new rally lows. Classical technical analysts might identify this as a potential Head & Shoulders pattern. It's still early days though. A break above 23800, or an immediate break below 22800 will make this less likely.

Other Asian Markets

Other Asian markets (such as the STI) seem to be executing similar patterns too. The SSEC's bullish medium-term picture is in danger of a truncation, after the impressive runup and the deeper-than-expected decline. It might be prudent to take profits on the impending rebound.

All the best!

S&P500: One more re-test of the highs?

2010-11-20T22:08:00.000-08:00

Since the May-10 correction ended in Jul-10, SPX has moved up against an atmosphere of doubt and skepticism, and retested the highs. The rise does look impulsive so far on teh daily chart and seems be tracing out a 4th wave, which implies one more attempt at the highs before a significant correction. Short-term resistance around 1205. Here's the 2-hourly chart, showing a break of the downtrendline.

Correlations: $USD vs Commodities, $USD vs Equities

2010-11-17T00:51:00.000-08:00

In response to one of my posts on the USD, a fellow investor at this forum rightly pointed out that the inverse correlation between USD and Commodities is stronger than between USD and Equities. Charts of USD vs the CRB & DJ World Indices are shown above. Even then, most USD turning points also turned out to be turning points for equities in the past 3 years. Hence, my view that it is a good idea for an Equity trader to keep an eye on the USD direction as well.

Hang Seng Index: Support at 23000 again

2010-11-17T00:25:00.000-08:00

Since the break above 23000, HSI traced out a successful back-test once, before resuming higher towards 25000. An overbought negative divergence created a sharp move lower, coinciding with the dip in the SSEC. Although now oversold on the hourly, the initial support at 22500 did not hold up. Next solid support level is at 23500, with additional help from the rising channel line. A second successful retest might see us range-bound between 23000-25000 for a while, before launching higher towards 27000 area. A break below 23000, will be bearish medium-term.

$USD Rockets higher

2010-11-16T17:41:00.000-08:00

Last post, "USD Rebound around the corner", suggested that the drop below $76 could be a false break. An initial rebound target of $78 was set. Yesterday, USD took off, breaking above this level, and more critically threatening to break out of the downtrendline. Equities have dipped in response. Resistance from the downtrendline and the $80 level, could see a back-test here. However, a confirmed break above $80, could keep Equities depressed for a while longer.

Shanghai Composite Very Short-Term: Positive Divergence

2010-11-16T05:09:00.000-08:00

Here's a 60-min chart of the SSEC. Note the 3-wave decline (so far) from the recent high of 3180. Also note the positive RSI divergence on the latest decline. And coupled with support around the 2850 region, a bounce is likely here in the very short-term towards the 3050 region initially.

Shanghai Composite Plunges: Was it the Interest Rates?!

2010-11-12T07:31:00.000-08:00

"Chinese Stocks Plunge"

"China Raises Rates, Jolting World Markets"

Just google, and you will find a few dozen reasons trying to explain why Chinese stocks plunged over 5% today. The question: Did these websites or analysts help investors GET OUT in time? Nope.

Ok, fine. So did they help investors GET IN, in time for the rally? Here's another 'expert' analyst view in June 2010, with SSEC trading around 2430:

"No upside to China stocks as credit tightens, strategist says"

Subsequently SSEC has gone as high as 3180, a 30% gain! So much for expert opinions.

So who knew about the Rally?

Folks who read up a bit of Elliott Wave Theory & basic Technical Analysis, knew with some degree of probability, that a five wave move in one direction is generally followed by a 3 wave move in the opposite direction (most of the time). This was the basis of the bullish call a few months ago on this blog.

And how about the PLUNGE today?

The extent of the decline (a whopping 5%) was not possible to envision, but we sure were setup for a fall. Although i couldn't publish this chart in time, here's three technical observations about the setup (see chart below):

1. Historical Resistance at 3180
2. Overbought with a clear negative divergence on the Daily chart.
3. Overbought on the Weekly chart.(not shown)

And the catalyst (Interest Rate Hike) magically appears at this juncture! For the fundamental folks, this was a classic example of how technicals can help time your investment decisions better.

So what's next?

This move down looks like the back-test of the breakout above the downtrendline. Crucial historical support is also nearby around 2900. If we stay above the line, we may go sideways here for a bit before any attempts higher. I may buy SSEC around the 2900 level, with a Stop at 2850. An unlikely break down here below 2850, changes the picture, and has support at 2700. Watch the volumes on this pullback for clues.

The medium-term target of the previous high of around 3480, still stands for now.

Hang Seng Index - very short term

On a side note, HSI has corrected as well, and seems to be developing a positive divergence on the hourly, indicating potential for a handsome rebound sometime next week.

All the best!

(EWI) FOREX FreeWeek!

2010-11-12T00:17:00.000-08:00

Our friends at Elliott Wave International have just announced the beginning of their popular FreeWeek event, where they throw open the doors for you to test-drive some of their most popular premium services -- at ZERO cost to you.

You can access all the intraday, daily, weekly and monthly forecasts from EWI's Currency Specialty Service right now through noon Eastern time Thursday, Nov. 18. This service is valued at $494/month, but you can get it free for one week only!

With Stock & Currency markets poised at crucial junctures, I trust you will benefit from their view points. Click here to access these resources. All the best!

South East Asia back at all-time-highs!

2010-11-12T00:13:00.000-08:00

The last time i showed this chart, price was just hanging below the upper parallel line. Since the breakout, we've had a powerful run in SE Asia, led by Indonesia(which has gone on to all-time new highs). With overbought negative divergences across major indices & the dollar potentially rebounding, we could see a pause here before an eventual breakout to new highs. Support is just below the 170 area on this chart.

$USD Rebound around the corner

2010-11-08T09:46:00.000-08:00

Since the last post on the USD, there was a rebound to the $78 level, before another breakdown, which broke the lower critical support line. However, given the positive RSI divergence, this could be a false breakdown as the subsequent sharp rally seems to suggest. A rebound is possible towards $78 level initially, implying a pause in the current rally in world markets. On the other hand, a failure to break back up above the line will point towards a much lower USD & higher stock prices in the medium-term.

2010-11-03T00:41:00.001-07:00

"Market Manipulation" Is Not Why Most Traders Lose
A look at EWI president Robert Prechter's requirements for successful trading
November 2, 2010 By Elliott Wave International

How often have you heard analysts refer to a down day on Wall Street as "traders taking profits"? Sounds great, butthe sobering fact is that most traders -- in futures, commodities, or forex -- lose money. Any book on trading will list for you the many reasons why most traders lose. Yet some traders do win; some even set records. In 1984, Elliott Wave International's founder and president Robert Prechter won the U.S. Trading Championship, setting a new all-time profit record of 444.4% in a monitored real-money options account. Later in his monthly Elliott Wave Theorist, Prechter published a Special Report "What A Trader Really needs To Be Successful" with 5 important insights for would-be market speculators (including the explanation of why "market manipulation" is not why most traders lose.)

Here's a quick excerpt -- and to read Prechter's Special Report in full, free, look below.

"What A Trader Really Needs To Be Successful" (excerpt)

By Robert Prechter
Ever since winning the United States Trading Championship in 1984 (see footnotes, p.4), subscribers have asked for a list of "tips" on trading, or even a play-by-play of the approximately 200 short term trades I made while following hourly market data over a four month period. Neither of these would do anyone any good. What successful trading requires is both more and less than most people think. In watching the reports of each new Championship over the past three years, it has been a joy to see what a large percentage of the top winners have been Elliott Wave Theorist subscribers and telephone consultation customers. (In fact, in the latest "standings" report from the USTC, of the top three producers in each of four categories, half are EWT subscribers!) However, while good traders may want the input from EWT, not all EWT subscribers are good traders. Obviously the winners know something the losers don't. What is it? What are the guidelines you really need to meet in order to trade the markets successfully?

When I first began trading, I did what many others who start out in the markets do: I developed a list of trading rules. The list was created piecemeal, with each new rule added, usually, following the conclusion of an unsuccessful trade. I continually asked myself, what would I do differently next time to make sure that this mistake would not recur? The resulting list of "do's" and "don'ts" ultimately comprised about 16 statements. Approximately six months following the completion of my carved-in-stone list of trading rules, I balled up the paper and threw it in the trash. What was the problem with my list, a list typical of so many novices who think they are learning something? After several months of attempting to apply the "rules," it became clear that I made not merely a mistake here and there in the list, but a fundamental error in compiling the list in the first place. The error was in taking aim at the last trade each time, as if the next trading situation would present a similar problem. By the time 16 rules are created, all situations are covered and the trader is back to square one. Let me give you an example of the ironies that result from the typical method of generating a list of trading rules. One of the most popular trading maxims is, "You can't go broke taking a profit." (The brokers invented that one, of course, which is one reason that new traders always hear of it!) This trading maxim appears to make wonderful sense, but only when viewed in the context of a recent trade with a specific outcome.

When you have entered a trade at a good price, watched it go your way for a while, then watched it go against you and turn into a loss, the maxim sounds like a pronouncement of divine
wisdom. What you are really saying, however, is that in the context of the last trade "I should have sold when I had a small profit."

Now let's see what happens on the next trade. You enter a trade, and after just a few days of watching it go your way, you sell out, only to stare in amazement as it continues to go in the direction you had expected, racking up paper gains of several hundred percent. You ask a more experienced trader what your error was, and he advises you sagely while peering over his glasses, "Remember this forever: Cut losses short; let profits run." So you reach for your list of trading rules and write this maxim, which means only, of course "I should NOT have sold when I had a small profit." So trading rules #2 and #14 are in direct conflict. Is this an isolated incident? What about rule #3, which reads, "Stay cool; never let emotions rule your trading," and #8, which reads, "If a trade is obviously going against you, get out of the way before it turns into a disaster." Stripped of their fancy attire, #3 says, "Don't panic during trading" and #8 says, "Go ahead and panic!" Such formulations are, in the final analysis, utterly useless. What I finally desired to create was a description not of each of the trees, but of the forest. After several years of trading, I came up with -- guess what -- another list! But this is not a list of "trading rules"; it's a list of requirements for successful trading. Most worthwhile truths are simple, and this list contains only five items. ...

Read the rest of Prechter's report now, free! Here's what you'll learn:

Why a trading method is a "must" for your success
What part discipline plays in your trading success
Why "market manipulation" is not why most traders lose
How to gain trading experience
More

This article was syndicated by Elliott Wave International and was originally published under the headline "Market Manipulation" Is Not Why Most Traders Lose. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

S&P500: Trendline Watch

2010-10-29T20:49:00.000-07:00

While the SPX is rangebound in the doldrums, here's the 15-year SPX chart once again. Good news for the bulls: the current consolidation is occuring just after a break above the downtrendline joining the Oct07-May10 tops. Good news for the bears: The decade old parallel channel line resistance(red line) is just above around 1210, followed by 1220 horizontal resistance.

With the weekly RSI overbought & dollar finding support as well, it would probably be prudent for bulls to take profits at this point, and wait for a positive break above 1220, before initiating fresh positions.

All the best!

Shanghai Composite: Another breakout

2010-10-26T21:00:00.000-07:00

Since the breakout above 2700, SSEC has rapidly climbed up to the upper downtrendline. In the past few sessions, there has been yet another breakout - this time above the downtrendline. Take a look at the weekly chart below. Next target is the wave A high of around 3480. However, with the weekly RSI reaching overbought, i'd await confirmation - some form of consolidation around the 3100 level + a successful retest of the line from above - before adding new positions. Horizontal support around 2900.

All the best!

Hang Seng Index: Support at 23000

2010-10-23T23:33:00.000-07:00

HSI has been consolidating its recent rise to new rally highs. Support is at 23000. A successful retest here of the breakout, might see higher levels medium-term, towards the 27000 level.

Shanghai Composite: The Tiger Roars!

2010-10-17T06:08:00.000-07:00

The crouching tiger, took the leap and then roared this week! Check out the volume - a stamp of classic third wave action! Broke through the 200-day MA with ease. In the very-short-term, overbought and approaching significant overhead resistance around the 3000 level. A sideways consolidation followed by a breakout would not surprise. The eventual minimum target of 3480 (the wave A high) still applies. For now, i'll be holding my medium-term positions and staying on board this chinese train.

All the best!

USD hits Support.

2010-10-17T05:45:00.000-07:00

The above is a weekly chart of the US Dollar Index. Markets are at an interesting juncture with emerging markets leading with minor breakouts to the upside. $USD at oversold & has reached trendline support here. A successful rebound may have bearish implications for global equities in the short-term, and conversely a break below would be medium-term bullish for equities.

Initial resistance on rebound is 80, while initial support is 74.

Shanghai Composite: The Tiger Leaps!

2010-10-08T01:41:00.000-07:00

My last post, "Shanghai Composite: Crouching Tiger" suggested an impending breakout above 2700. Today, the Tiger took the leap on high volume (+ 3.13%). I have added some long positions with a stop just below 2700. The initial target of 2900 from my last post still stands, with a potential short-medium term target of 3100. Watch out for resistance from the descending trendline.

All the best!

Hang Seng: Expect Consolidation Here

2010-10-07T09:08:00.000-07:00

Last post on the HSI suggested 23000 as the first stop, in this medium-term bullish breakout. We're there now, and also at the top of the channel as shown. Expect a back-test of the breakout here, or at least a sideways consolidation over the next few weeks, before any further upside. A sustained break above 23000 right now might turn it into a strong support level instead.

2010-10-06T05:12:00.001-07:00

Video (Part 3): Prechter - Investing in Extreme Markets

(Note: This interview was originally recorded on September 20, 2010)

In the video below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about a technical pattern he sees forming in the Dow.

Get Up to Speed on Robert Prechter's Latest Perspective — Download this Special FREE Report Now.

2010-10-06T05:11:00.001-07:00

Video (Part 2): Prechter: Ominous Pattern in the DJIA

(Note: This interview was originally recorded on September 20, 2010)

In the video below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about a technical pattern he sees forming in the Dow.

Get Up to Speed on Robert Prechter's Latest Perspective — Download this Special FREE Report Now.

2010-10-06T04:43:00.000-07:00

Video (Part 1): Prechter On Market Rally

(Note: This interview was originally recorded on September 20, 2010)

In the video below, Robert Prechter talks to Yahoo! Finance Tech Ticker host Aaron Task and Henry Blodget about extreme readings in various indicators that confirm his bear-market forecast.

Get Up to Speed on Robert Prechter's Latest Perspective — Download this Special FREE Report Now.

S&P500: Make or Break time!

2010-10-06T04:41:00.000-07:00

In March this year, i suggested "Sell in May and go away", based on a 15-year SPX chart. In May, the SPX peaked at 1220 right on the dot as shown on this chart. Now, it's make-or-break time for the S&P500. It is up against downtrendline resistance joining the Oct07-May10 tops, and overbought. Just above is the long-term trendline(red) that stopped the SPX dead in its tracks in May. Which way is it gonna go?

The answer may lie in this daily chart below. SPX is currently also up against the blue upper channel line.

Considering seasonality, chances are it will turn here. But if it does zoom up above those trendlines, the correction may have ended at point A, and we may be reckoning with a wave 3 up here with a test of the highs looming.

Look for a impulsive decline below 1130, or a continued surge above the downtrendlines.

All the best!

Funda-MENTALs for the Short-Term?!

2010-09-30T09:07:00.000-07:00

The futility of buying or selling stocks in the short-term, on fundamental news/data, was laid bare by today's Shanghai market action!

THE NEWS:

"China Government Moves to Curb Lending
China has tightened limits on mortgage lending and plans to roll out a new tax on home sales, acting once again to cool a property market that some fear is frothing into a bubble. The required downpayment for a first home purchases rises to 30 percent, up from 20 percent, while purchases of second homes will require a 50 percent downpayment, up from 40 percent. Loans for purchases of third homes are banned, said the announcement on the government's website."

MARKET REACTION:

Up 1.72%!

And just a few weeks ago, this same market would've dived on such news.

China market will be closed for the whole next week, as the population there does its' yearly mass migration. Traders might wanna sit out, and wait for a break above 2700 before going long.

All the best!

(Video) Nifty: Expect New Highs by Year End.

2010-09-27T21:17:00.000-07:00

In May, i posted this video interview of Mark Galasiewski , who is the editor of Asia Pacific Financial Forecast, at Elliott Wave International. He had then called for Nifty 6000. And now with Nifty springing above that level, here's another of his interviews with ET:

Mark Galasiewski Interview, Sept 23

Enjoy!

Hang Seng Index Bullish Breakout

2010-09-25T00:58:00.000-07:00

Hang Seng Index broke above a significant downtrendline as indicated in previous posts. Due for a backtest of the breakout in the short-term, which if successful, points towards a bullish medium-term outlook. Immediate resistance is previous high of 23000. Further upside levels are indicated on the chart.

S&P500 Hourly: Negative Divergence

2010-09-24T23:13:00.000-07:00

SPX setting up a negative divergence with RSI, implying a pullback is due in the very short-term. I would wait for the RSI to hit 70 before initiating a day-trade, with a stop just above last high. Supports at 1130 & 1123.

S&P500: Trendline Watch

2010-09-22T01:24:00.000-07:00

Last post on 5-Sep, called for a move up into the 1130-1150 range on the SPX, followed by a U-turn. We're there now, and it remains to be seen, if there's gonna be an impulsive decline to follow. The likely location for the reversal is around 1150, or the upper line of the blue channel. A move back below 1130 would be the first step. The potential spoiler to this scenario is the rough Inverse H&S formation that is just breaking out.

(Alternate View: the A-B-C was completed in Jul, and SPX has just embarked on a new uptrend.)

Let's see if the Sept Equinox can spoil the party for the Bulls. All the best!

Youth today - Leaders tomorrow!

2010-09-18T07:36:00.000-07:00

As we wait for the the September Equinox to try and rattle the markets, here's something interesting. The image below is the top 20 gold medal tally, from the recently concluded Inaugural Youth Olympic Games, in Singapore.

How many of them are Developed countries, and how many of them Emerging Markets? Cuba & Azerbaijan in the top 20? Youth of today, Leaders of tomorrow?

Socionomics - Prechter's Genius

2010-09-15T07:25:00.000-07:00

Robert Prechter of EWI, has made some brilliant calls in his career. Although he may not have been on the money, with his recent short-term market calls, but here's why i've loads of respect for this guy - the man's a genius when it comes to socionomics.

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Tea Party: Why NOW?
By Vadim Pokhlebkin

The Tea Party has gathered enough momentum to become a political force. According to an April Gallup Poll, "28% of U.S. adults call themselves supporters of the Tea Party." (gallup.com)

Earlier this year, New York Times columnist David Brooks wrote this (underline added):

"Over the course of this year, the tea party movement will probably be transformed. Right now, it is an amateurish movement with mediocre leadership. But several bright and polished politicians... are unofficially competing to become its de facto leader. If they succeed, their movement is likely to outgrow its crude beginnings and become a major force in American politics."

I realize the Tea Party itself is a politically charged topic. But set aside your personal opinions for a moment, and please read the quotes below. They are from Robert Prechter's October 2003 Elliott Wave Theorist.

In that issue, EWI's president gave several prescient forecasts regarding social life and politics in the coming bear market (underline added):

"Social groups, including economic, political, religious, genders and classes, will polarize and splinter further. I.e., they will polarize both internally and with respect to opposing groups."
"Both patriotism and anti-government sentiment will grow into powerful emotional forces."
"Politics will become far more polarized, splintered and radical."
"The U.S. will accelerate its trend toward socialism. Opposition to that trend will be vigorous."
"Third parties will gain political clout and win local elections. Libertarians, greens and others will capture many local offices and probably at least one state government."

How was Bob Prechter able to predict the emergence of a third party and the polarization that's been tearing this country apart for the past few years?

He did so by using socionomics, the new science of social prediction based on the Elliott Wave Principle. It postulates that social mood (an unconsciously shared herding impulse) drives social events. Elliott wave patterns in stock market charts reflect social mood. Thus by forecasting the stock market you can also anticipate the tenor of social events -- often with stunning accuracy, as you can see.

Find the idea of socionomics fascinating? You're not alone -- the folks at EWI's sister organization The Socionomics Institute share your passion. You can read their latest socionomic observations and forecasts every month in The Socionomist. Take a look at what's inside the latest issue. (You also get instant access to May, April, March and February Socionomist issues.)

Shanghai Composite: Crouching Tiger?

2010-09-10T22:39:00.000-07:00

SSEC has been crouching just below 2700 level for the past few weeks. The two possibilities in my view are shown on the chart. Whichever the case, i'm looking for an initial target between 2900-3060 in the short-to-medium-term, and possibly even higher in the medium-term. Depending on your chosen vehicle for trading the SSEC, you may be outperforming big time, especially if you are in a small-cap focused etf or fund (Check out the FTSE Xinhua charts below).

(FTSE Xinhua) All-Share Index vs China A50 Index vs Small Cap Index

China A50 approximates the performance of SSEC.

The Small Cap Index has already exceeded its all-time-highs! So, it pays to know your etf/fund. Please do your own research on performance, as i am unable to provide specific fund/etf recommendations.

The long-term outlook for China is not necessarily all bullish. For my longer term view on the Shanghai Composite, check out this earlier post: "Shanghai Composite: Why i am BULLISH medium-term!".

So, where are the long-term Bull Markets?

If you wanna find out where the Asian Bull Markets are, I highly recommend this excellent copy(older edition) of the Asian Pacific Financial Forecast, from Mark Galasiewski of EWI - can be downloaded for free - covering the major Asian markets.

Enjoy!

S&P500: Trendline Watch

2010-09-05T05:02:00.000-07:00

S&P500 has reached the downtrendline as suggested, and may now take a breather, before breaking above it. Very Short Term, support is at 1100 & 1085. My primary view in the medium-term: a move up towards 1130-1150 is possible to finish this complex B wave. Still expecting a C-wave tumble towards 950 after that, to possibly end the correction. Watch the blue channel on a break above the maroon channel.

All the best!

EWI Free Week for Asian & European Markets!

2010-09-05T00:05:00.000-07:00

Hello folks,

Elliott Wave International has just announced the beginning of their wildly popular FreeWeek event.

You can access(for FREE) EWI's short-term analysis of Asian-Pacific (such as China, India, Hong Kong, Singapore, Japan, Taiwan, Gold) and European markets from EWI's Short Term Update services right now until noon Eastern time Friday, Sept. 10.

I trust you will benefit from this analysis. Remember, it is a limited time offer.

You can click here, or on the banner above to access the content. (You may have to sign up for a free club member id, if you haven't done so already)

Enjoy!

S&P500: 1100 is the line in the sand

2010-09-02T05:42:00.000-07:00

A solid break, out of the channel! Expect initial resistance at 1090.

Expect stiff resistance at 1100 - the historical resistance, as well as the location of the downtrendline. In other words, it may be the line in the sand separating bulls from bears.

Meanwhile in Asia, Shanghai Composite seems to be in the "crouching tiger" phase, before a possible break above 2700. All the best!

Bankers' Song - We Didn't See It Comin!

2010-08-29T01:40:00.000-07:00

S&P500 Very Short-term: Up against Channel Resistance

2010-08-27T22:19:00.000-07:00

1040 acts as solid support once again! The strong rally towards 1065 in the last session, will run into resistance(channel) around here, and at the congestion area around 1070. Would be interesting to see if 1060 holds during the ensuing consolidation. If it DOES, we may see 1080. If it DOES NOT, we may be about to find out how solid (or not) 1040 really is!

MSCI Emerging Markets & HSI: Trendline Break

2010-08-25T17:51:00.000-07:00

MSCI Emerging Markets Index looks like it has completed a B wave up, and is probably setup for an impulsive C decline over the next couple of months. Strong support in the 900-910 area, a failure of which will open the door to 825-830 region, to end the correction.

On a related note, Hang Seng Index (HSI) has broken its short-term uptrendline and may be headed lower to the 19800 region initially. Further supports at 19400 and 19000. In the very short-term, a rebound is possible to re-test the trendline break.

All the best!

(From Leisa) Finding your Inner Blogger

2010-08-21T16:00:00.000-07:00

In today's super-connected world, throw a virtual stone and you are likely to hit a blog somewhere. And there's no shortage of investing and trading blogs out there either. So, why do we blog?

Here's an excellent post from my well-read friend Leisa, snippets of which i copied here. Who knows, this may even get you started on your own blog!

"Most people think of blogging as very public affair. They would no more write a public blog than they would run naked through a crowded square. I'm writing today to encourage you to create a your own private blog. If you first shuddered upon reading that, I want you to re-read it. "Private" is the operative word. You can easily set up a blog on Blogger (and I presume other venues, but my experience is with Blogger) in such a way that it is private only to you. However, if you have Unibomber or Ted Bundy tendencies, then I would suggest to you that a private blog on the internet would not be a wise choice. Rather, I'm writing this post today for those of you who have slapped your head or kicked yourself in the tush because you had a market/trade idea that you let get away from you..."

"Is not writing the concretization of thought? If you find writing agonizing, it is with good reason. Writing is what ensnares your mind's flights of fancy and imposes order. Writing forces you to wrestle your ideas to the ground so that they become accessible, practicable and, most importantly, executable. Your writing is the score of your mind's symphony of ideas. When it written, it is memorialized and accessible to you for further tweaking. The process is not meant to be easy. The process is meant to be discomfiting enough because it forces you to make your thinking productive and actionable. No longer are your thoughts an ethereal agent... "

"I will concede that some of you are tapping your toe and saying "No way!". You are a minimalist! You care only about your charts! Like all over- zealous door-knockers, I have an answer to that objection. A blog will help you post your charts and document your thinking. You can use labels that will allow you to post just your trade journal. You can upload your annotated charts, state your trade criteria and---most importantly--detail your post mortem. Perhaps your trade is so splendiferous that you want to memorialize it in its own special category. Add a tag! By simply clicking on your labels you can easily find all of your splendiferous trades. For a trade that went woefully awry, memorialize that one too with its own tag... "

Click here for the full post.
Do check out her trading-related posts on the US markets too.

trendlines

S&P500 powers into 1300 range

Shanghai Composite Short-Term: Positive Divergence

Shanghai Breakdown, Hang Seng Update

S&P500: Reaching 200-day Moving Average

Singapore Exchange & The Straits Times Index

Hang Seng Index: Reaching Friendlier Grounds (22,400)

(Video) Fight of the Century: Keynes vs Hayek

Shanghai Composite: On Life Support

SENSEX: Reaching Support Zone

Hang Seng Index: Trendline Watch

S&P500 Failed IHS & Downtrend Channel

S&P500 IHS Update

S&P500 Inverse Head & Shoulders: Target 1430

Shanghai Composite: Retreating towards 2850

S&P500: Sentiment fires a WARNING shot!

Shanghai Composite: A BIG Triangle = A BIG Move ?

Hang Seng Index: Consolidation before a Breakout?

Straits Times Index: Facing a Familiar Foe!

DJ World Index: Through the Elliott Eye!

Elliott Wave Theorist, FREE until Mar-21

Shanghai Composite: Breakout Fails

Straits Times Index: Overhead Resistance

S&P500 Short-Term: Update

Shanghai Composite: Upside Breakout!

(Video) Quantitative Easing Explained!

S&P500 Short-Term: Bearish Wedge

Apple iPad2 Poll: Fibonacci in Action!!!

Asia: Some Bullish Breakouts UPDATE

Singapore Exchange: Breaks Medium-term Uptrend

S&P500: Trendline Break!

Shanghai & Shenzhen Update

"Elliott Wave Principle": FREE online edition

Singapore Exchange: Decision Time

Straits Times Index: In Dire Straits

Shanghai & Shenzhen: Break Up!

Hang Seng Index: Break Down!

S&P500: Trendline Watch

USD looking down the rabbit hole!

GOLD: At Uptrendline

SENSEX: Reaching Support

Shanghai Composite: Trendline Watch

Are you a Trained Fireman?

Russell Has a Kit Kat!

Shenzhen Composite: Make or Break

SENSEX: Trendline Watch

S&P500: Approaching Multi-Year Congestion

Asia: Some Bullish Breakouts!

Wanton Noodles in New York: HSI & SPX

Hang Seng Index: Breaks Shoulder Line

(Video) Prechter on CNBC: "Not a bear among them"

2011 & the DOW

S&P500: Achieved Target Area.

Singapore Exchange: Back to the drawing board!

Shanghai Composite: Testing Resistance

H&S in H&S UPDATE

Singapore Exchange: Short-term bounce ahead?

Shanghai Composite & Shenzhen Composite

S&P500: Wave 5 underway

Vietnam may go Vertical.

H&S in H&S?

Hang Seng Index V Short Term: Update

SENSEX, Scandals & Socionomics!

$USD breaks out of downtrend

Hang Seng Index, Short Term: An Impulsive Decline

S&P500: One more re-test of the highs?

Correlations: $USD vs Commodities, $USD vs Equities

Hang Seng Index: Support at 23000 again

$USD Rockets higher

Shanghai Composite Very Short-Term: Positive Divergence

Shanghai Composite Plunges: Was it the Interest Rates?!

(EWI) FOREX FreeWeek!

South East Asia back at all-time-highs!

$USD Rebound around the corner

"Market Manipulation" Is Not Why Most Traders Lose A look at EWI president Robert Prechter's requirements for successful trading November 2, 2010 By Elliott Wave International

S&P500: Trendline Watch

Shanghai Composite: Another breakout

Hang Seng Index: Support at 23000

Shanghai Composite: The Tiger Roars!

USD hits Support.

"Market Manipulation" Is Not Why Most Traders Lose
A look at EWI president Robert Prechter's requirements for successful trading
November 2, 2010 By Elliott Wave International