US and Asian Bourses Review

Since the second week of March 2009 US stock market has been moving in an uptrend channel and as in the past, the whole world bourses followed Dow and moved in the same direction. After running for more than 2 months, how much further can the markets run? Based on Elliott's wave principles, I have tried to assign (in my opinion) one or two likely wave counts (out of various possibilities) for US and some Asian bourses.

For the US market, as I have discussed before, at this juncture, the two most likely possibilities are the wave (I)-(II)-(III)-(IV) option as shown below

and the option of sub-waves 1-2-3-4-5 to form wave (I) as shown below.

However, the Nasdaq chart below shows only the possible option of sub-waves 1-2-3-4-5 to form wave (I). The technical indicators also indicated the completion of one single wave since March.

S&P 500 and its technical indicators as shown below, shows a similar possible wave count to that of Nasdaq. If Dow, Nasdaq and S&P have to be the same ultimately, It is likely that Dow will go for the same wave count as Nasdaq and S&P of having just completed its major wave (I) and is currently in its wave (II) consolidation phase. In the last 10 days, 3 sub-waves have been completed. It is likely that the consolidation will continue sideway for at least another two weeks.

I have observed that most of Asian bourses have a much stronger reaction to the April's A/H1N1 outbreak than the US market. Because of that most of the charts for Asian bourses except Shanghai composite, are showing a 4 waves formation. Nikkie of Japan is showing such a formation as shown below.

Shanghai Composite Index (SSEC) as shown below, has been moving in its own way and pattern since its November 2008's low. It has completed its major waves (I)-(II) and waves 1-2 and sub-waves i-ii-iii. Currently it is in sub-wave iv. It is only half-way through its major wave (III)

Hong Kong's Hang Seng Index (HSI) is influenced partly by the US market and partly by the China market. So far the HSI has completed its major wave (I)-(II) and waves 1-2-3 and is currently in wave 4. It needs one more up to complete wave 5 of the major wave (III)

Singapore STI followed the US more than China. There are two possibilities for STI. Same as the Dow, it has its low in March 2009. For option 1 as shown below, it has completed wave 1-2 and sub-waves i-ii. Currently it is in sub-wave iii

For option 2, the count is wave 1-2-3 and currently in wave 4. In this option, STI is lagging behind the Dow by one wave, the fifth wave.

For KL composite Index, because of the political situation and the off and on supports given to the market by the government's investmet institutions, its wave count is very much different from those mentioned above. It has its low in December as discussed in my older posts. Since then it has completed major wave (I)-(II) followed by a series of smaller waves in an uptrend direction as shown. KLCI's reaction to the A/H1N1 is not noticeable from the chart. As long as there is no serious swing in other major bourses mentioned above, KLCI should be able to continue its current trend. Based on Fibonacci ratio of 2.618 a possible intermediate top for KLCI is 1077 as has been discussed previously. If it can break 1077 and moves higher, Fibonacci ratio of 3.618 may have to be used.

For the US market I have suggested a further 2 weeks of sideway consolidation early is based on the observation that most of the Asian bourses have not finished their respective uptrend movement as shown above. These bourses need another one to two weeks to complete the remaining waves.