After the property bubble collapsed in 1989, Nikkei dropped 54% in 5 years from 38,916 to 17,913 and it reached its real bottom in 2003 at 7,972 for an ultimate 79% drop after 13 years. Will the Dow behave in a similar way?
From the long-term wave count, the mega wave 5 has ended and it appeared that Dow is heading for a 'Head and Shoulders' formation. If mega wave 5 is the end of the super cycle wave (III) that started in 1932 after the Great Depression, Dow is currently forming the super cycle wave (IV) that can easily last for 10 years or more.
Another possibility is that the super cycle wave (III) has 9 waves and Dow is forming its mega wave 6 since October 2007 and it may last until 2012 (5 years same as wave (II)) if it takes the form of a simple a-b-c.
Dow is currently at its wave 5 of major wave iii. When will the wave 5 end? I don't know. There is a possibility that Dow is being supported at this moment so that the big fish can have time to clear out from the Asia Pacific Markets. It also appeared to me that Hang Seng has started its downtrend, the rebound since March 2009 has already ended. If the 'Head and shoulders' reversal pattern can be confirmed next week, Hang Seng will start to move lower at a faster pace.
When will the Malaysian market turn south? I don't think I am able to answer this question. In the last market peak, Dow started to go south in October 2007 but the Malaysian market continued to move up to set its peak in January 2008, lagging behind the Dow by 3 months as shown below.
The longer term chart pattern for Dow, Hang Seng and KLCI have shown great similarity and it is normal for them to have short term variations amongst them. To clear out of the market early can be a safe action but may miss the juicy last surge for certain stocks. Gamuda-WD can be one of them.
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