Have a look at Hong Kong, Singapore and Malaysia

Let's have a closer look at Hong Kong HSI, Singapore STI and Malaysia KLCI and then re-examine the Dow Jones Industrial Average.

There are two possible ways of counting the wave form for Hang Seng Index. Alternative I, as shown above is to count from the peak 3 waves down 1-2-3, the rebound after the bottom A formed a 5 waves wedge formation i-ii-iii-iv-v, a 'leading diagonal' wave 1 followed by 3 waves down a-b-c to form 2 as shown below.

In this alternative I, the point A at 11,015 in October 2008 is taken as the bottom of Major Wave A of the bear market (first phase). From October 2008 until now HSI has completed wave 1 and 2 of the Major Wave B rebound wave. HSI is currently in wave 3 of the Major Wave B.

Alternative II wave count for HSI is as shown above. After the wave 3 down, the following 3 waves rebound is taken as wave 4. The small wave after wave4 is pushed to wave 5 as its first wave followed by ii-iii-iv and v to complete the wave 5 as shown below.

In this alternative, from the peak HSI has 5 waves down instead of 3 waves down in alternative I. The bottom at 5 marked the end of the bear phase(first phase). The up trend in March is considered as wave 1 of Major Wave B rebound wave.

For Singapore STI, wave 4 rebound is clearly 3 waves and since wave 5 is much lower than wave 3, it is very clear cut that the bear market (first phase) ended in March 2009. This wave count is similar to Alternative II of Hong Kong HSI.

Similarly the up trend wave since early March is considered as the beginning of Major Wave B rebound.


For Bursa Malaysia, the form looked more like 3 waves down A-B-C with sub-wave 9 of wave C as a failure wave. The first phase of the bear market ended in early December 2008. Since then the Major Wave B has completed its wave 1 and 2. Currently the index is at the beginning of wave 3. as shown below.

The wave form for Dow looks more like Hong Kong HSI Alternative II and Singapore STI except that Dow has formed only 3 waves from wave 4 to the 6,547 low in March as shown below.


If the low at 6,547 is taken as the end of wave 5 similar to HSI and STI, then wave iv and v of wave 5 are missing. An alternative wave count is a diagonal wave form as I have explained in my previous post.

I noticed that in October 2007 market top, the last uptrend wave 5 of Dow consists of only 3 waves instead of 5 waves, sub-wave iv and v were not there. Does it mean that at major market top or bottom, when momentum in the reverse direction is so great that the last wave is unable to complete its wave form.

If Dow started to turn down within the next 3 days and goes below its previous low of 6,547, then it is forming a diagonal wave 5. However if Dow continues to surge beyond 8,300 together with HSI, STI and KLCI, then there is only one conclusion, all the 4 bourses are in their major bear market rebound, the Major Wave B, that can last for many months.