SENSEX: Trendline Watch

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

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!

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

(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

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 ;)