World Bourses

Dow started Monday trading at 0.5% lower as the US Congress was unable to get an agreement on the debt ceiling, pushing US closer to a debt default. Since March 1962, the debt ceiling has been raised 74 times, I see no difference this time it will be raised before August 2, the deadline.

The money printing machine is able to maintain the US market at the current high level that appeared to be artificial to me. The next issue after the debt ceiling is the QE 3 whether it will be implemented and more US$ be printed.

At its current level, Dow managed to recoup 83% of of its 2007-2009 losses. So far there is no sign of any market reversal. The possibility of a 'head and shoulder' is still there.

FTSE is able to match Dow's performance closely. However it has started to move side-way since January this year. A drop below the lower support will confirmed the 'double tops' reversal and I expect FTSE to move lower at a faster pace once the lower support line is broken.

German's export has been doing very well due to low Euro, a big thank to the debt problems of Greece, Italy, Spain and Portugal that dragged down the Euro.

French CAC40 has been moving side-way in the last 19 months, that is a long time. It managed to recoup only 45% of its previous losses. I expect it to retest its March 2009 low once its lower support is broken.

Japanese Nikkei 225's performance is even worst than CAC40.

Australian currency might be strong due to its commodity based economy but the AORD index has been moving side-way since the beginning of 2010. Watch out for a 'double tops' reversal pattern.

Hang Seng is about to break its lower support. It may take the lead in moving south.

Singapore STI has broken its lower support. I take this as a very bearish sign. A break below its current wedge formation will speed up the fall.

Bursa Malaysia KLCI has set a new historical high in early July with low volume in a lethargic market. Something is not right when one compared it with the euphoric market condition during the 1993-94 bull-run. The gain is due to a few blue chips and is not broad base. Remember the 'bathtub theory', the blue chips are the last to fall.

For Bursa Malaysia, I always prefer to monitor the Industrial Index that has a better correlation with other world market indices.

Will its next down breaks the lower resistance line? If so, run for your life.

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