Wave 5 has started for Hang Seng and STI

On Thursday and Friday Hang Seng put on a total of 1260 points (7.5%) and as shown above, the wave 5 has started and it is likely to reach 20,000. This wave count of waves 1-2-3-4 is the most conservative count but I shall stick with this count until there is sufficient data to knock out this option.

Singapore chart as shown below is the same as Hang Seng, it has also started its wave 5 and it is likely to reach 2,680.

If Hang Seng and Singapore STI are in wave 5, I would like to assume that KL Composte will contiue its uptrend move until such time when Hang Seng and STI have completed their respective wave 5 and have started their respective correction.

Diagonal Tringles

Courtesy of Elliott Wave Dot Net

Triangles are overlapping five waves 3-3-3-3-3 formation as shown above. While going through some of the charts of US stocks, I noticed that most of them are forming triangles. The last leg, wave e is usually not so well behaved, it can fall short and it also can overshoot.

Bank of America's triangles moved in a parallel uptrend channel. This type of triangles does not fall into any category of Elliott. However, based on my past experience, this is a bullish formation. The run up is always very strong upon breaking the upper trendline.

If most of the stocks (5 out of 7 of the stocks that I have been monitoring) are having this wave 1 and a triangles a-b-c-d-e wave 2 formation, does it mean Dow's Wave (I)-(II) option that I have mentioned is a more likely outcome, If that is the case, watch out for the train, make sure everybody is onboard.

Keep an eye on Hang Seng and Singapore STI

In my previous post I mentioned that the likely wave count for Hong Kong Hang Seng Index was a 1-2-3-4 wave formation as shown below. The next wave, wave 5 will have to break its immediate previous height of 17544 and the upper trendline at 17,700 before it can proceed to complete the wave 5 at 20,000

For Singapore STI, if its wave count is similar to Hang Seng's 1-2-3-4 formation, STI will have to break its upper trendline at 2,270 before it can proceed to complete the fifth wave at around 2,680

The point here is, if Hang Seng and STI are going to continue their uptrends in the next one or two weeks, during this period KLCI should not have any major pull back.

Parkson Holdings Bhd

Parkson Holdings Bhd is principally involved in investment holding (a major holder of Parkson Retails in China), steel services, international trading and distribution of electronics components, manufacture and distribution of automotives and components. Last quarterly earning (Oct. Nov. Dec 2008) was 10.23 sen per share. Net assets per share was Rm 1.36. In the last few months the company has been buying back its own shares from the open market. Treasury shares accumulated to date is about 21.5 million.

From a peak of about Rm 10.00 in December 2007, the stock price dropped to about Rm 3.00 due to the world financial crisis started from the US. The bottom of the downtrend was formed in January 2009. Since then the stock price has been moving up steadily.

The stock is forming a double bottoms pattern as shown above. It has been trying to break the neckline for the last three weeks.

From the wave count shown above, if it can punch through the neckline, the powerful wave vii will be the next wave, failure which it will remain in its consolidation phase of a-b-c or a-b-c-d-e. Chances is quite high that it will break its neckline for a wave vii run up. Minimum target price is Rm 6.00

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.

Mulpha International - Update 1

Refer to my April 26 post, the long-term wave count remains the same as shown below. In 2006 after UOB Kay Hian published its reports on South Johor Economic Region that valued Mulpha at a minimum price of Rm2.68 based on its 800 acres of land near Johor Bahru, Mulpha moved to Rm 2.10 by April 2007. Due to the financial crisis, it moved to a low of 27 sen by end of March 2009. A good buy for long term at current price of about 50 sen

Refer to the chart below, wave count since March 2009 bottom is still the same. Since then the wave form has completed waves 3-4-5. There are two possibilities at this point. It is either going for 9 waves with wave 6 completed and is currently in sub-waves 'i' and 'ii' of wave 7 as shown below or with wave 5 as the end of higher degree wave (I) followed by sub-waves a-b-c to form wave (II). It has completed sub-wave a (at point 6 location) and is forming i-ii-iii of sub-wave b. Under this a-b-c scenario, the b can go to about 55 sen at best before moving down to form c at around 42 or 43 sen.

Resorts World Bhd

A very solid stock with Rm2.79 billion cash and zero bank borrowing. A very clear inverted head and shoulders formation with Rm 2.60 as breakout level as shown above. Looking at the chart, Resorts can never come this low without the current economic crisis that rank only second to the 1929 Great Depression. An golden opportunity for investor to keep for long-term.

Recent heights at end of wave (I) and wave b rebound are the same value of Rm2.57. It will have to break Rm 2.57 before breaking Rm 2.60, the neck-line for the inverted head and shoulders

The simplified balance sheet is very solid. Look at the Rm 2.794 billion cash and the Rm 8,355 billion reserve. The company has been buying back its own shares from the open market since July 2007 when its price was Rm 4.20. The item under "Treasury Shares" of Rm 627 million is the cost for 182 million treasury shares. The average purchase price is Rm 3.44 which is much higher than the Thurseday closing price of Rm 2.42.

Limit on SPM subjects

DPM said yesterday government might limit the number of subjects taken by student in the SPM for fairer PSD scholarship selection. I am very stupid, can somebody tell me why by limiting all the student to take only 9 subjects or less can make PSD scholarship award fairer. To me, if the Government considered students with 7A1 should be given scholarship, then all students with 7A1 and above be given the scholarships, simple only. If there are other factors, make them known to everybody, be transparent. Of course other than this NEP has to be taken into consideration, nobody is questioning NEP.

Dow 3 Red Candlesticks In A Row

Dow dropped another 129 points on Thursday but the uptrend still remains intact as shown below

For the two possibilities that I have discussed in my May 19 post, the (I)-(II)-(III)-(IV) option remains the same except the wave a-b-c for wave(IV) takes a slightly different form but the magnitude and duration are almost the same as the a-b-c for (II)

For the other 1-2-3-4-5-6-7 option that I have mentioned, it is no more valid. It appears that that the major (I) has only 5 waves instead of 9. Dow is forming (II) at the moment. For this option the wave c of (II) can even go slightly below the lower trendline.

Look at the indicators below, both the options have even chances.

How high KL Composite can go ?

(Double clicks to enlarge the chart)

KLCI after hitting a bottom at 835 in December 2008 (refer to my older posts), it has so far completed wave (I) and (II) to form a "Triple Bottoms Reversal" pattern. Wave (III) started in March 2009 from 837. So far wave (III) has completed its sub-waves i-ii-iii-iv-v-vi-vii and viii, currently it is in sub-wave ix that may take another 3 to 4 days to complete. Based on the magnitude of wave(I) of 92 points, by using Fibonacci ratio of 2.618, wave (III) can end at 1077 (92x2.618+837) unless wave (III) continues with sub-wave x-xi-xii and xiii, under such circumstances Fibonacci ratio of 3.618 will have to be used.

Dow put on 235 points (2.8%) on Monday

Dow's 235 points up (2.8%) on Monday is bigger than what I have expected and has temporary reversed the downtrend set by the first 5 mini waves that I have mentioned two days ago. It appears that the current uptrend is being prolonged for a while.

As for the technical indicators, as usual they will swing together with the index.

After forming the 5 mini downtrend waves, I was expecting the Dow to break through the lower trend-line but instead of that, Dow has a candlestick that has recouped 75% of the losses caused by the 5 mini waves and at the sametime ruled out the expected downtrend waves i-ii-iii-iv-v that I have mentioned previously because the 'iv' rebound can not be so big that it overlapped 'i'. As shown below, the current uptrend is still remained intact.

The uptrend cases of either (I)-(II)-(III)-(IV)-(V) formation as shown above with Dow currently forming wave(V) or the 1-2-3-4-5-6 formation as shown below with Dow currently forming wave 7 (same as KLSE Composite) are more likely. Traders that have cleared out can move in again for another round whereas medium term investors can clear more stocks at better price.

Meanwhile keep an eye on the lower trendline for a break down in the uptrend. The balance of the uptrend journey is expected to be short.

'Char Siew Pau'

This is something from my daughter, some of you might have heard this before.

These are 'Char Siew Pau'

And these are 'Man Tau'

Question No 1 : 'Char Siew Pau' and 'Man Tau' went for movie, a sad movie. 'Char Siew Pau' cried and cried and cried but 'Man Tau' didn't, why?

Answer : 'Char Siew Pau' has filling (feeling), 'Man Tau' doesn't have filling.

Haha 'Mo Liew'

OK, next question most people can answer

Question No. 2 : 'Char Siew Pau' and 'Tai Pau' went for the same movie. 'Char Siew Pau' cried and cried, 'Tai Pau' cried louder, why?

Answer : 'Tai Pau' has more filling.

Question No. 3 : 'Char Siew Pau' and 'Tau Sar Pau' went for the same movie, 'Char Siew Pau' cried and cried, 'Tau Sar Pau' hugged 'Char Siew Pau' and consoled 'Char Siew Pau', why?

Answer : 'Tau Sar Pau' is sweet.

Next question many people can not answer.

Question No. 4 : This time 'Char Siew Pau' went to the same movie alone, 'Char Siew Pau' didn't cry, why?

Answer : This is the fourth time 'Char Siew Pau' watched the same movie. The filling has no more feeling.

'sub-fun-moo-liew'

Five waves set the trend

Both Nasdaq and Dow closed with about 0.5% drop on Friday as shown below with their respective technical indicators.


It is interesting to find that the indicators for the first time since March 9 are moving towards the baseline. It is also interesting to note that also for the first time since March 9, Dow has formed five mini downtrend waves as shown below. The Elliott's wave basic concept is "five waves in the direction of the main trend followed by three corrective waves". Based on this basic concept, the main trend for Dow currently is downtrend.

As discussed in my previous post, in a 1-2-3-4-5 formation as shown below, Dow after completing its major wave (I), it is currently trying to complete its wave "a" of its a-b-c or a-b-c-d-e corrective wave (II). So far it has completed "i" and "ii" and is either has or needs another one or two days to complete its "iii". "a" can take the form of either three-waves i-ii-iii or five-waves i-ii-iii-iv-v.

The second possible form of (I)-(II)-(III) formation for Dow (the bearish option) as shown below, after completing wave (III) and that is the major (6) of the bear since October 2007, Dow is heading for major (7) as explained in my previous post, Dow can reach 6,547 or even lower. This option looks unlikely at this moment but in stock market "anything can happen". At the end of 2007 very few people including those experts of the big international investment houses were able to foresee the Dow to drop for 17 months to 6,547. In the current down trend Dow has completed "i" and "ii", currently in "iii" to be followed by "iv" and "v" to complete its wave 1, which is to be followed later by waves 2-3-4 and 5. A "long and winding road"-The Beatles

While analysing the Dow, it suddenly struck my mind that there is another high possibility that the market might just take a short pause before it continues to run for another leg as shown below. In this case, the waves after (III) is not i-ii-iii as mentioned above, they are a-b-c instead as shown below with "c" having 5 mini waves. If this is really the case "c" has either completed or it needs another one the most two days to complete. What about the indicators? Well, the indicators will just touch the base and then go back to touch the top again. If this does happen, the (V) is going to be a short (V) for a diagonal wedge formation, just nice for one to sell the rest of the stocks in hand. For the traders, just nice to go for one more round especially on those speculative penny stocks that have pulled back sharply in the last few days. ((III) is much shorter then (I), (V) should be much shorter than (III)).

Wonderful Flowering Inducer

About two months ago I went to the Orchid Garden near Taman Tasik Pertana (KL Lake Garden), while chichating with one of the store operator, he recommended to me this blue colour flowering inducer in a 500ml mineral bottle as shown below. I paid Rm 10.00 for a bottle.


I mixed 5ml of this solution to 1 litre of water (as per instruction) and sprayed my orchid plants once a week. After one month plus I noticed that most of my orchid plants started to flower including some of the plants that have never flowered before.

This yellow flower orchid is a rare wild orchid that has refused to flower for years. I saw this plants at Sg. Buloh a few weeks ago, a 1 foot tall plant was selling at Rm700.00 per pot.

If your orchid plants have flowering problem, you can try this blue solution.