Dow - Nothing has changed

US Dollar Index has started to slide again after its recent high of above 76.

For global markets, I prefer to maintain my bearish view.

I don't think I can write off the 'Head and Shoulders' for the Dow at this moment. For long-term chart where the range of the prices is great, I usually used the semi-logarithm scale.

After the 2007 October's high, the correction so far, Dow is either forming an A-B-C wave major 6 or it is forming an A-B-C-D-E, mega wave (IV).For either case, the next wave down should be wave C and it can easily last more than 18 months.

For Bursa Malaysia, the FBMKLCI composite index may appear to be bullish, but in the last few weeks, its uptrend was not confirmed by the Industrial Index, this is the first time since the December 2008 bottom.

Whenever there is a divergence between the Composite Index and the Industrial Index, based on my past observation, the Composite Index will finally follow the Industrial Index. It happened at the 1997 peak before the market crash; and it has also happened at the 2009 market bottom before the run up. One really has to be very careful about the current divergence.

My current monitoring is focused on the Nasdaq index, as long as the Nasdaq continues to have new low that is lower than the previous low and new high that is lower than the previous high, the down trend is intact. Ultimately it will trigger a panic sell off. It is currently at sub-wave iii of wave1, still a long way to go if I am right.

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