From October 2007 peak to March 2009 low, there are 5 waves, the low can either be wave A or wave 1. Since the rebound until November 2010 high has a magnitude to big to be wave 2, it is more likely that it is B.
Since November 2010, Hang Seng has been moving in a down trend channel with high lower than the previous high and low lower than the previous low (Dow Theory). My wave count is as shown above. Hang Seng is expected to break its short-term lower support very soon.
However, if the index breakout of its upper resistance line, then I will have to look at it differently.
Despite of all the bad news, world bourses were able to move higher in the last few days including today.
The only reason that I can think of is the excessive liquidity in the markets. I won't be surprised that many nations might have followed the foot step of the US government in excessive money printing. They can keep on printing and pushing the stocks and commodities, the bubble will become bigger and bigger and when it burst, it is going to be worst than the 2007/2009 bear.
The following article written by Toby Connor published yesterday is rather bearish.
Click the following to read.
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