One of my friend that used to trade in Hong Kong Stock Market called up and asking for my reading on Hang Seng Index. I think, most likely, he is not so comfortable about the Hong Kong Market at this moment. Before looking at the Hang Seng Index, it may be good to have a look at the Shanghai market SSEC Index.
Shanghai SSEC has completed its major wave (I) in August 2009. From its low of 1706 in November 2008 to its height of 3471 in August 2009, SSEC has gained 103%. The market has been consolidating for almost 5 months. So far SSEC has completed wave A and B of its major wave (II) and its downward wave C has just started, it is likely to drift downwards in the next one to two months.
My wave count for Hang Seng is as shown above. It has completed major waves (I), (II) and (III). It is likely to move side-way to form a complex wave (IV), since it has a simple wave (II). However, if the index starts to surge and move higher than its November 2009 height, then, Hang Seng is extending its wave (III) from 9 waves to 13 waves. But in view of the Shanghai Index being in consolidation phase, it is highly unlikely that it wave (III) will be extended.
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