Weekend Summary

Third Biggest Stock Bubble

It is good to be reminded that we are ridding on an enormous assets bubble currently and it is anybody guess that when it will burst. According to Andrew Smithers, "We're in the third biggest stock bubble in US history", click to read.

Brett Arends, "Probably the most important single implication of this analysis is not what is going to happen today or next week or even next year. It is to remind investors that stocks in aggregate have not always generated high return."

Dow (17,804)

Dow recovered from its Tuesday low of 17,068 to close the week at 17,804. 

At this moment, I am assuming that Dow is forming its wave (xiv) until I can see some signs that I may be wrong and that Dow is possibly heading for a much higher degree major wave (6) or mega wave 2 correction. And of course there is always this possibility which I considered quite unlikely at this moment that the peak of 17,958 on 5th December is the end of the bull run since March 2009.

It may be good to have a look at October 2007 peak.

Dow's first drop was from 14164 to 13622 for a 4.5% drop followed by a 3% rebound. Most investors were not aware that it was the beginning of a new bear market that would bring Dow all the way to 6547 by March 2009 for a 54% decline.

In fact during period from October 2007 to January 2008, when Dow dropped by 10%, FBMKLCI moved from 1369 on 9th October to 1516 (peak) on 11th January 2008, gained 10.7%.

FBMKLCI (1,715)

Based on KLCI 20-year chart, no matter how I count, mega wave (5) has completed only 4 waves, it has yet to form its major wave 5.

On Friday KLCI ended the day at 1,715 level. Is Tuesday's low of 1,673 the end of major wave 4 ? And has major wave 5 started ?

It appeared to me that major wave 5 has started.

Pan Malaysia Corporation Bhd (Rm 0.205)

With the recent sharp drop by PMCorp to 16.5 sens, I have revised my wave count for PMCorp. 

PMCorp has completed its mega wave (1) and (2). The next up trend is likely to be its mega wave (3).


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