Can Marc Faber be right this time ?

US Market

For years, Marc Faber has been predicting the meltdown of US stocks, but only to see the markets climb higher.

In this CNBC interview a few hours ago Marc Faber was talking about the possibility of an up to 40% drop for US stocks.

Click 'Why US stocks could drop up to 40%' for the interview by CNBC

Marc Faber is not talking about my 12% major wave (6) correction where I assumed the mega wave 1 has more than 5 waves.

If it is up to 40% correction, it has to be the mega wave 2 correction, then the mega wave 1 has only 5 waves and it has ended when Dow has completed its ending diagonal triangle wave (xiii).

If mega wave 2 goes all way to the end of major wave (4), it will be a 42% pullback, I think this is what Marc Faber is talking about. At this moment he did not mention the possibility of a 100% retracement to 6,547 level, that will give a 64% correction.

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Dow - Has sub-wave ii of major wave (6) ended?

Dow dropped 181 points (-1%) to close at 17,919 on Tuesday. Has the sub-wave ii rebound ended? Is this red candlestick the starting of sub-wave iii going down south?

 

 

If this is the starting of sub-wave iii of major wave (6), Dow is going to come down quite fast in the next few days.


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Democracy in Action - It happens everywhere.

 



 

Greece PM, Alexis Tsipras, called for referendum on July 5, urging all Greeks to reject the bailout proposal from the creditors as the conditions imposed are humiliating. 61% of voters gave him their votes, a big 'No' to the bailout terms.

 

Shortly after obtaining the mandate, Tsipras made a deal with the creditors that would impose even stricter measure on Greece than what was voted on.

 

This is how 'democracy' works.

'I certainly don't want to be told that the government I live under represents me. What if I don't like any of the people running for office? what if I vote and the person I vote for doesn't win?'

'Or what if I vote for someone and then the person does something completely different than what he campaigned on?'

Greek people just had a referendum with crystal clear result, 'No', Yet Tsipras's government defied the collective will of the people.

It happens everywhere. You can find Tsipras everywhere, messing up the whole country and refused to disappear.


Click 'Should Greece Pay Its Debt' for the article, It is interesting.

 

 

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Weekend Update

Dow (18,086)

Sub-wave ii rebound is about there, Dow should start to move lower to form its sub-wave iii.

However, if Dow continues to move higher from here and set new record high, then I will have to abandon my present wave count and look for other new possible count.

 

FBMKLCI (1,726)

 

Has KLCI completed its wave (ii) correction ?  

 

 

 

If it has, then the current run-up is the wave (iii)

 

 

If it hasn't then the current run-up is only a wave b of (ii) rebound.

 

 

 

LCTH Corporation Bhd (Rm 0.63)

 

It is clear now that LCTH has completed its wave (i)-(ii), sub-wave i-ii and is currently forming its sub-wave iii.

 

 

 

It will continue to be dynamic with high volume as it is at its iii of (iii) of 3.

 

 

 

 

 

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I don't trust them

A good comment by Briton Ryle on Obama's historic deal with Iran that will free up to $150 billion of Iranian cash and 40 million of Iranian oil.

Click 'Iran Hostage' for the article.

 

 

 

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One by one

Lee Swee Kiat Group Bhd (Rm 0.29)

Yesterday LCTH gained 13.7%, today it was Leesk's turn, it gained 18.4% to close 4.5 sens up at 29 sens. Has its wave (iv) correction ended ?  Is this the starting of its wave (v) of major wave 3 ?

There are two possible wave counts due to the small little wave formed 3 to 5 days ago. If this little wave is part of wave (v), then I can get 7 down waves, which is equivalent to an a-b-c wave, then wave (iv) is completed and wave (v) has started and it is heading for 40 sens.

 

 

However, if that little wave is the failure mini wave v of 5, then there is only 5 down waves, then it has to be the wave a of (iv). Then the current rebound is the wave b of (iv). Then it is better to sell at 30 to 32 sens and buy back later say at 18 to 20 sens. So many 'then', only God knows which is which.

 



 

 

KSL Holdings Bhd (Rm 1.63)

 

The big question is whether major wave 4 has ended ? Is KSL the next one to move like LCTH and Leesk ?

 



 

 

Looking at its 6-month chart, based on the wave count shown below, there is one possibility that wave c of major wave 4 has just ended. Even the sub-wave v has 5 mini waves. The main assumption here is wave c has only 5 waves, wave (i) to (v) and wave (v) has only 5 sub-wave, sub-wave i to v and sub-wave v has only 5 mini waves, mini wave 1 to 5. Again, only God knows.

 



 

Amen

 

The one lesson to learn before a market crash

 

 

An interesting article by Jim Quinn, Click 'Before a Market Crash' for the article.

 

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LCTH Corporation Bhd

LCTH put on a strong candlestick with very high volume, gaining 7 sens (+13.7%) to close at 58 sens on Tuesday. Its profit is expected to increase due to weak Ringgit.

This surge has confirmed that LCTH has completed its major wave 2.

At this moment, it is either forming its sub-wave iii. In this case it will continue to move higher with high volume tomorrow.

However, if it started to consolidate tomorrow, then it is more likely that it has formed its sub-wave v and wave (i) and the next pullback can be the wave (ii).

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Weekend Update

Dow (17,760)

Dow performed strongly on Friday, added 211 points (+1.21%) to close the week at 17,760. It is forming the wave c of mini wave 4 rebound. Next down will be the mini wave 5.

 



FBMKLCI (1,715)

KLCI continued with its wave b rebound and added 14 points (+0.825) on Friday. Under this option it should continue to move higher and goes above its mini wave 1.

However, if it is unable to move higher next week, the next possibility is as shown below, wave a has one more down leg.

 

 

Chen Lip Keong has three boring stocks

 

First one is Karambunai (Rm 0.055). 

 

Losing money every quarters. From 19 sens in early 2011, it dropped all way within a downtrend channel to 5.5 sens on Friday. CLK is holding more than 74% of the shares. In 2013 Kbunai issued 2.9 billion shares valued at 11.11 sens to CLK for the settlement of Rm 322 millions of his personal loan to Kbunai.

 

Similarly Kbunai issued another 320 million shares also valued at 11.11 sens to FACB to write off  Rm 35.6 million outstanding loan.

 



 

 

It appeared to me that Kbunai is possibly forming its last movement for its wave C of (2) and if it can move up from this level, then it is a 'double-bottom' formation.

 

 

Second one is Facb Industries (Rm 1.06).

 

Every quarter earning a few miserable sens but is cash rich with zero borrowing. Besides its businesses and other assets, its cash per share is Rm 1.74 but it was traded at Rm 1.06 last Friday. I don't understand.

 

Technically it has been forming its major wave 4 since early 2014. From the chart below, it may even go below Rm 1.00 to complete its 4.



 

 

 

 

Third one is Petaling Tin (Rm 0.25)

 

Losing money since 2008 except 2011 (+0.43 sen) and 2012 (+2.47 sen). Net assets per share is Rm 1.03. Same as Kbunai, it has 1,500 acres of land in Sabah located at the Karambunai Peninsular valued at Rm 3.53 per sq. ft. 62 acres under the same master title has been approved and subdivided for development and is valued at Rm 14.30 a sq. ft. Just wonder what should be the valuation for that 1,500 acres of land.

 

According to my wave count, if I am right, it is at the tail end of its mega wave (4).

 

 



 

 

Don't forget, quite often I have read the charts wrongly. 

 

 

 

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China - A topsy turvy market.

China

In the last two weeks, Shanghai SSE composite index was having its  roller coaster ride. Up and down with more than 3 to 5% a day with limit down for many stocks.

 

By last Wednesday close to 50% of the listed companies were allowed to suspend their stocks from trading.

 

In addition, the Chinese Government announced that company bosses, senior management of the companies and investors with more than 5% stocks are prohibited from selling their shares in the open market for the next 6 months.

 

This is a heavily manipulated market. Within 12 months SSE Composite can go up 160% from 2000 to 5178 followed by a 35% decline within a month.

 



 

 

This is nothing if we look at the up and down in 2007/2008. That was 460% within 2 years from August 2005 to October 2007 averaging 230% a year with a subsequent plunge of 70%  within a year.

 

Has the Chinese market collapsed ?  Technically if the last high of 5178 is the end of wave B, then the market has collapsed, it is heading for 1000 level, another 70% to go from its current level.

 

 



 

But personally I don't think so, I give it a higher probability that SSE Composite is forming its major wave 2 correction so as to tie in with my scenario of a major collapse in 2017 when the assets bubble finally burst.

 



 

 

 

Don't forget the possibility of a 100% retracement for a wave 2 correction.

Greece

Very likely a revised bailout package will be compromised and the 'No way to solve' Greece debts problem will be postponed to 2017 for a final countdown.


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Europe rebounded strongly

European markets rebounded strongly on Thursday on hopes of a new bailout deal for Greece as Germany bows to huge global pressure, especially from the US, for debt relief for Greece.

 

Many European nations that are smaller and poorer than Greece such as Slovakia, Latvia and Lithuania that have faced crisis themselves, forced to swallowed the austerity medicine are against a new bailout deal for Greece.

 

 

Pensioners and other poor people in these smaller countries just wonder why they are being asked to pay to bail out their far richer Greek counterparts that have been enjoying their Mediterranean sun all these years.

 

 

 

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A bad day for China

Major Asian Markets

A horrible day for the Asian Markets. Both Shanghai SSE composite index and Hong Kong Hang Seng index dropped close to 6%. But I still maintained that this is only a higher degree correction. The assets bubble is not burst yet. My date for the bubble to burst is 2017, not now.

Dow (17,515)

Dow dropped 261 points (-1.5%), wave 3 of iii has started. The drop is expected to be faster with steeper gradient. Dow still has to drop another 1,500 points to complete its major wave (6), another 8.5% to go.

FBMKLCI (1,695)

KLCI dropped 16 points (-1%), not that bad compared to other Asian markets and despite the Ringgit has dropped to another new low. Most likely it is because KLCI has dropped much longer and much earlier due to 1MDB and UMNO's problems.

I maintained my reading for KLCI and hoped that the 1673 level can hold. That is only another 22 points to go.

As usual, my reading can be wrong and if KLCI does drop below 1673 level, the next possibility is that the major wave 4 is not yet completed.

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'OXI' (No) stormed to victory with 61.31% of the vote

Greece - It is 'OXI'

The Greeks have rejected the bailout terms of the their creditors and put the country closer to an exit from the 19-nation Eurozone.

 

 

Will the creditors accept Greek Prime Minister Alexis Tsipras's revised loan proposal at the Eurozone leaders' summit on Tuesday (7th July) ? Given that there have been some tough words on both sides before Sunday's referendum, it may be more difficult to find common ground. Another difficult hurdle is the fact that Spain, Portugal and Ireland have swallowed their respective bailout terms bitterly before this, why should Greece be treated differently?

 

Just wait and see what is next. 

 

Major Asian Markets

 

Japan Nikkei 225 lost about 2%, Hong Kong dropped 3.18% and Singapore dropped only 0.29%. Shanghai SSE Composite has been on its own all this while. It gained 2.4% to close at 3775 which is 24.8% lower than its high of 5023 on 5th June, last month.

 

 

FBMKLCI closed at 1717, dropping 17 points about 1%. I am still thinking of a wave b rebound.

 



 

 

 

Major European Markets

 

Markets dropped around 1.4% to 2%, not really that bad, most likely the Greece factor has already been discounted to a certain degree.

 

 

Dow (17,683)

 

Dow dropped only 46 points (-0.26%) at the close, but still on course for its 12% major wave (6) correction. From its May's high of 18,312, it has dropped 3.4%.

 

 

 

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Wealth Daily - Greece's Keynesian Experiment

Greece's Keynesian Experiment.

" ......... Anyone who had significant money in a Greek bank was not wise. There was plenty of warnings, really for the last several years. ........"

" ......... The people there should have already left if possible. ........"

 

 

" .......... They should not have had their money in Greek bank ........"

 



 

 

 

" ..... They should have had some cash for emergencies, and I am sure some gold or silver wouldn't have hurt either .... " 

 

 

 

 

" ........ Most importantly, they should not have trusted their government. ......"

 



 

 

 

" ...... they should not have become reliant on government handouts ....... "

 



 

 

 

Click 'Greece's Keynesian Experiment' for the article from Wealth Daily.

 

 

Knowing very well a 'No' vote would mean financial chaos for Greece and would see Greece being ejected from the Eurozone and yet Prime Minister Alexis Tsipras, for his own political survival, urged Greeks to vote for 'No' for 'living in Europe with dignity'.  

 

Just wonder what 'dignity' he is talking about, his or Greece's.

 

 

Latest From Germany :

Greece could exit Eurozone 'temporarily'.

 

In 2012, Eurozone could not afford 'Greece Exit' to happen. But since then Europe has constructed significant firewalls to separate the Greeks from the rest of the single-currency bloc and it is time to chop off this liability.

 

Click 'Euro Firewall' for reports.

 

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