Bad news is good news

Dow gained 149 points (1%) on Wednesday when it was reported that the U.S. first quarter GDP grew at only 1.8%, which was 0.6% below the anticipated 2.4%. With the economy slowing down, investors do not expect the Federal Reserve to scale back its US$85 billion a month in bond purchases. So, bond prices rose, bond yields fell and equities were up.

The gain is only a rebound, Dow will continue to move towards the lower trend line. 

When Dow is OK, Asian markets rebounded today.

 

Email from Japan

A bit dissatisfied that I did not manage to see Mt. Fuji yesterday, I set out first thing in the morning to look for it (before the cloud does its thing again).  We boarded a cable car and Mt. Fuji was nowhere in sight.  Then, suddenly, it appeared. 

Wah, so grand. Since the other mountain that we can all relate to is the Matterhorn, I will just say this - Matterhorn is like Armani, angular and sharp. Mt. Fuji is like papa, rounded and comforting. Somehow when I see it, I think of a father, and when I think of a father, I think of my papa.


 Mmmm..... I am like Mt. Fuji.  I think Mt. Fuji should look much better.

 Mmmm...... with reflection - So elegant.

 Rather lonely under the moonlight - A lonely papa.

 This is much better, with beautiful flowers all around - A romantic and happy papa :) with mama around.


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Shanghai SSEC - How low can it go ?

Due to surging interest rate and tight liquidity, Shanghai SSEC dropped 5.3% yesterday and today, at its intraday's low, the index dropped another 5.6%. However buyers in the afternoon managed to push the index back to near its opening price.

SSEC has remained in its consolidation phase since its record closing in 2007.

From its October 2007's peak of 6092, it plunged 72% within 12 months to 1708 - Wave A

It rebounded to 3462 for a 102% gain within 9 months - Wave B

Since November 2009, the index has been moving lower and lower for 42 months - Wave C

The index has reached the final journey of sub-wave 5 of the wave C. It may form a double bottom at 1700 level, that is another 13% to go.

It is rather funny that people are worried about the Chinese stocks only at this moment, after its has dropped 43% since November 2009 (42 months) and has reached the final part of its journey south. May be they are worried about a grand finale.


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Have the asset bubbles burst ?

Global markets continue to slide on Monday. The drop varies from 1% to 2% except China's Shanghai market that dropped 5.3%. Dow currently has dropped 230 points (1.5%) after 2 hours of trading. Have the asset bubbles that were created by excessive money printing and low interest rates burst ? Personally I don't think so. Ultimately the bubbles will burst but not now.

Dow is forming its wave (viii) currently. It is expected to drop to around 14,300 level before the next wave (ix) starts to run to above 16,000 level to complete the major wave (5), which is also a possible ending point for mega wave 1. Wave (ix) will need a few months to form.

However if Dow continues to drop below 14300 level in the next few days, its final support will be the lower red trend line.

Bursa Malaysia

KLCI is having its wave (iv) consolidation. Hopefully it can stop around 1700 level.

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When the U.S. sneezes

It is still true that 'when the US sneezes the world catches cold'.

Dow is currently having its higher degree 8% wave (viii) consolidation.

Dow dropped 206 points (1.34%) yesterday, all the Asian market followed with big losses today. Investors also worried about a slowdown in China's economy.

Similarly the European markets are not doing well at this moment. The British, German and French markets all having losses exceeding 3% at this moment.

After 2 hours of trading, Dow has lost about 1.46% or 220 points. If I am looking at 14,300 level for wave (viii), from its current level of 14,900, Dow has another 600 points to go. Looking at the sharp drop, Dow may need less than 2 weeks to complete the wave (viii).



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When Bernanke speaks

Bernanke " If the economy continues to improve, the asset-purchasing program could start winding down towards the end of 2013 and wrap up in 2014".

Dow was holding very well in the morning until Bernanke talked about the winding down of the monthly US$85 billion program in the afternoon. Dow dropped 206 points to 15,112 for a 1.35% drop at the close.

 

Wave (viii) continues with the starting of its wave c. It will take about another two to three weeks to complete its wave (viii) at around 14,300 level for an 8% correction.

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My wave-count for some of the stocks

Please remember, the form can change and I can be wrong in my wave-count.

 

 

 

 

 

Dow Jones Industrial Average

Dow will need another two to three weeks to complete wave (viii) and several months to complete wave (ix) before Bernanke's term as the Federal Reserve Chairman ends in January 2014. I believe Bernanke will continue his US$85 billion a month programme to make sure that the bubble won't burst before his term expired.

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Dow - wave (viii) in progress.

Dow dropped 105 points (-0.7%) on Friday. With the up and down side way movement in the last 8 trading sessions, it appears that the correction since 22nd May is slowly developing into a higher degree wave (viii) with 8% correction.

Dow may be able to complete its wave (viii) by early July. The following wave (ix) is likely to bring Dow to the 16,000 level or even higher in the next few months.

After that, the main question is whether the mega wave 1 has only 5 waves and it has ended ?



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Dow - Has the big bubble burst ?

In order to absorb US$85 billion a month of printed money so that it won't depreciate value of US dollar, stocks prices and other asset values need to move higher and higher and higher. The asset bubble will ultimately burst but not now.

At this moment Dow is either forming its sub-wave ix as shown to complete its wave (vii), (if Dow continues to move higher).

OR wave (vii) has already been completed as shown below (if Dow continues to move lower), then the anticipated 8% to 9% wave (viii) correction has already started.
 

If Dow can hold, Bursa Malaysia should be able to hold. So what we have seen today is just a normal corrections.



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Is everything OK ?

World bourses were rather volatile in the last few days. Investors were worried about the sharp decline of Tokyo market, economy slow down in China and that the US Federal Reserve might reduce the US$85 billion per month bonds buying programme.

Looking at the 5-Year chart for Dow,

Dow has yet to complete its waves (vii), (viii) and (ix) before completing its major wave (5).

As long as Dow doesn't drop below its lower trend line, everything is OK.

Hong Kong's Hang Seng Index is forming its wave (iv) at this moment, still a long way to go before it can finish its mega wave (3).

Singapore STI is the same as Hang Seng, still a long way to go before completing its mega wave (3).

When Dow, Hang Seng and STI are OK, Bursa Malaysia should be OK, nothing to worry at this moment until Dow goes below its lower trend line that warrant a review to my current wave counts.


Inch Kenneth (Rm 0.95)

Inch Kenneth is forming a long-term inverted head-and-shoulder pattern.

It managed to break its neckline in January 2013. It also managed to stay on top of its neckline in the last 5 months, forming a a-b-c-d-e sub-wave ii. Very classical. The only question is whether mini-wave e has been completed ?

Inch Kenneth gained 3 sen with a slightly higher volume today. If it can continue to move higher tomorrow with greater volume and if it can go above 98 sen, it is possible that mini-wave e has been completed and its sub-wave iii will be heading for Rm 1.60 level (minimum target).

However, if it starts to move lower tomorrow and goes below the 92 sen level, then mini-wave e is not yet complete. It may drop to 88 sen and below to complete its sub-wave ii before starting its sub-wave iii.
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Bursa Malaysia - Property sector.

An update to my previous post dated 9th May 2013,

Since 9th May 2013, the property index has gained another 11% to 1,472 at the close of today's trading.

 

It is likely that mini wave iv has been completed. Mini wave v has the potential of gaining another 20% to 1750 level.

Perak Corp (Rm2.57)

 

Within a month, Perak Corp managed to punch through its neckline, gained 89 sen (+53%) and confirmed the double-bottom reversal.

 

Perak Corp gained 22 sen today with record volume confirming the dynamic nature of mini wave iii of sub-wave (iii) of wave 3. Technically it has a minimum target of about Rm6.00 within 2 years.

Malton (Rm 0.835)

 

Malton moved from 56 sen to 83.5 sen within a month for a 49% gain.

Same as Perak Corp, Malton started its mini wave iii of sub-wave (iii) of wave (3) with fantastic volume. It has a minimum target of Rm1.35, about another 50 sen (+60%) in front. It is highly possible that it will move beyond Rm1.50.

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Dow - Sub-wave ix continues.

Dow gained 207 points (+1.38%) on Friday to close at 15,248 level. If Dow doesn't go under 15,000 again, sub-wave ix will complete its move toward 16,000 by end of June or early July.

The next correction, an 8% to 9% wave (viii) pullback, is expected to take place in July.

Roland Garros

Sharapova was beaten by Serena Williams 6:4, 6:4 in the final

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Dow - Alternative wave count

Dow closed slightly below the 15,000 level on Wednesday at 14,960. If it can close higher today, then my previous wave count as shown below remains valid.

However if Dow continues to drop further, an alternative wave count is as shown below.

After 2 and a half  hours of trading, Dow has dropped about 100 points to14860, giving this alternative wave count a higher probability unless buyers push it to above 15000 at the close.

Under this alternative, the recent high marked the end of wave (vii) and the current downtrend is the wave (viii) correction. Dow will go for an 8% to 9% pullback.

Singapore STI

Singapore STI dropped about 8% within 10 trading days, quite steep and sharp. The index dropped another 50 points or 1.54% today to close at 3,193 and remain within the up-trend channel. A drop below the lower support line will confirm that wave 1 has been completed and wave 2 is in progress.

Roland Garros

Sharapova moved into the French Tennis Open final by knocking out Azarenka 6-1, 2-6, 6-4 in the semi-final.



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