Monday, December 26, 2016

Crude Oil WTI heading for US$71 a barrel

Crude Oil WTI (US$53.23)

Crude oil continues to have its wave (iv) rebound. The current up is likely to be the wave c of (iv).

From its weekly chart as shown below, there is an 'inverted head and shoulder' formation. If I project one length up, US$ 71 can be a possible target for wave (iv).

Dow (19,933)

My wave count for Dow remained the same. Dow is forming its wave (v).

I have quoted on my chart what the Federal Reserve Chair Janet Yellen had said on 5th May and on 14th December. When Dow was at around 17800, she commented that the equity market valuations were quite high. But 7 months later on 14th December when Dow has moved to 19800, she considered stock valuations were in normal range.

Mark Melin has commented on Yellen's statement divergence in his article dated 23rd December. Click 'Why did Yellen talk up stock valuation now but not in May ?' for the article.

FBMKLCI (1,617)

KLCI is on its way to complete its major wave 4 correction. At this moment I am not sure how low the wave (iii) of E of 4 can go because wave (iii) of E can have 5 waves and it can also have 9 waves.


Tuesday, December 20, 2016

Insas Bhd (Rm 0.715)

Insas's volume started to pick up today with 1.1 million shares changed hand. It ended the day gaining 1 sen to closed at Rm 0.715.

From the 10-year chart, so far Insas has completed its mega wave (4). It has also completed the major wave 1-2, wave (i)-(ii), sub-wave i-ii and mini wave 1-2 of its mega wave (5).

There is this possibility that Insas is currently forming the mini wave 3 of iii of (iii) of 3 of its mega wave (5). Volume is expected to improve further.


Monday, December 19, 2016

EG Industries Bhd (Rm0.885)

EG moved up strongly today with impressive volume. Is this the starting of another bull run for this stock? or it is another 1-day affair in its side way consolidation?

Corrective wave is very difficult to count as it can take many forms. Looking at its longer term Chart, the 10-year chart, it is quite clear the next up-trend will be the major wave 5 and EG should reach at least its previous height (major wave 3) of Rm1.23.

The important question is whether EG has completed its major wave 4.

From its 1-year chart, one possible wave count is a abc-X-abc wave 4, and EG has completed its major wave 4 in October. Since then EG has completed its sub-wave i and ii and the current run-up is a possible sub-wave iii that I have been looking for since mid November.

Dow (19,863)

Dow gained about 20 points after 2 hours of trading on Monday morning.

It is possible that Dow has completed its mini wave 4 correction and has started its mini wave 5 of its wave (v). As I have explained previously, I expect the current major wave (7) to have 9 waves. Another word, the current up-trend is not expected to end at wave (v).

I expect the current wave (v) to move well above the 20,000 level which can be a solid support for its wave (vi) correction.


Monday, December 12, 2016

Dow - Major wave (7) is going for 9 waves.

Dow (19,756)

Dow has a strong breakout on last Wednesday and proceeded to move higher on Thursday and Friday.

By Friday the magnitude of wave (v) has exceeded the magnitude of wave (iii). If I go by the Elliott wave principle that the magnitude of the third impulse wave cannot be the shortest impulse wave, it means the third impulse wave contains extensions, and the current wave (v) can be read as the sub-wave iii of (iii). The short wave (iii) is the sub-wave i of (iii). That also means the major wave (7) is going to have 9 waves.

FBMKLCI (1,641)

KLCI continued with its wave E of 4 correction.

I expect KLCI to move lower for its last down leg to complete its wave E and its major wave 4 as shown above, unless it has a failure E as shown below where sub-wave iv and sub-wave v of E are missing. Then the gap that was formed by last Thursday's candlestick is a run-away gap. Under this condition the KLCI will continue to move higher from its current level.


Wednesday, December 7, 2016

Dow - Major wave (7) about to end ?

Dow (19,251)

Dow set another record high on Tuesday.

If Dow is well behaved, it will complete its wave (v) within the next few days. The next question is whether this major wave (7) has 5 or 9 waves. If it has only 5 waves, Dow may go into consolidation until Trump officially takes office as USA's 45th president on 20th January 2017.

But at this stage I can not rule out the possibility of a 9-wave major wave (7) as shown below.

From the long-term chart, we need not worry too much about the major wave (8) correction of 10% to 15%. It is the mega wave VIII correction that we have to worry because it can drop as much as 40% to 50%.


Sunday, December 4, 2016

How low can the Ringgit go


As I have shown in my previous article, I have yet to find an Asian currency that has strengthened against the US$ after Donald Trump has won the US presidential election. And so far Malaysian Ringgit is the currency that has dropped the most against the US$.

The question now is how low will it go in the near term. By just looking at the USD/MYR long-term chart (1983 - 2016 Dec 2) as shown below,

If I assumed that the January 1998 Rm 4.882 to 1 US$ is the peak, I noticed that from this peak to its low of Rm 2.932 to 1 US$, i.e from January 1998 to July 2011 (13 years), there are 5 down waves, wave (i) to wave (v), this has to be wave A. From there until last Friday closing of Rm 4.484 to 1 US$, there are 7 up waves, wave (i) to wave (vii), I considered this as a potential wave B. The main question now is whether wave (vii) has ended to form a small double-top reversal pattern, or it is going for January 1998 intra-day high of Rm 4.882 to 1 US$ to form a big double-top reversal pattern. Or it will end somewhere between Rm 4.484 and Rm 4.882 ? Only time will tell.

If my reading is right, you can say this is a bullish reading because the wave C is going to bring the Ringgit back to July 2011 low of Rm 2.932 to 1 US$ or even back to July 1995 low of Rm 2.432 to 1 US$ for a 100% retracement.

Looking at what is happening in Malaysia (red shirt, yellow shirt, politic, economy, government, crime rate, corruption, education system, government system, 1MDB ......... etc. etc. Nobody will believe that this can happen to the Ringgit 10 years down the road. But this is what the chart tells, unless my assumption of January 1998 Rm 4.882 to 1 US$ as the peak is wrong.

Malaysian Stock Market

First, let us look at the Dow because I always believe that world bourses including Bursa Malaysia will ultimately move in tandem with the US market.

Dow is not yet due for a collapsed. At worst, Dow has completed its major wave (7) if major wave (7) has only 5 waves. It may continue to form 9 waves. Dow still has major wave (8) and (9) in front. No worry.

What about crude oil price.

Good news for KLCI, wave (iv) in progress, heading for US$ 80 a barrel. My target is US$ 70 a barrel.

But is KLCI going to move in tandem with the Dow ?

From 1986 to 2016, KLCI, in general, has been following very closely moving up and down with the Dow except during 1997/1998 Asian currency crisis. KLCI dropped 68% from Oct 1997 to Sept 1998. Whereas during the same period Dow moved higher in 1997, gained 15%  but subsequently it dropped 16%, net drop is only about 1% compared to KLCI 68%.

In 2016, KLCI has a side way movement whereas Dow kept on setting new record highs, moving from 16,516 to last Friday's 19,170, gaining 16%.

But if my wave B's reading for USD/MYR is right and crude oil is forming its wave (iv), my reading for KLCI is as shown below.

There is a major wave 5 in front but I have to wait for the completion of major wave 4.


Saturday, December 3, 2016

Relly not that bad ?

Click 'Ringgit fall not that bad' for the article.

Let us compare the performance of USD/MYR with the performance of the currency of our neighbouring Asean countries, namely, Thailand, Indonesia, Singapore and the Philippines, with respect to the US$ from May 2016 to 2nd Dec 2016

When compare to other major Asian currencies and that of Australia.

The Japanese Yen's drop of 14.6% and 11.2% appeared sharp is mainly because the currency has moved up strongly against the US$ gaining 6.28% before the drop. If we removed this 6.28% from the figures then the drops are not that sharp.

Similarly the Korean Won has gained 5.12% and the Australian $ has gained 3.72% before the drop.

When compared with that of Euro, the ringgit dropped more.

What about British Pound.

I don't think we should compare USD/MYR with USD/GBP because in June 2016, when the British voted to leave the European Union, the Pound immediately dropped 15.17% against the USD. Subsequently it dropped to as low as 0.824 GBP to 1 USD on October 11 and that was before the US presidential election. Since then, despite Trump's victory and the strengthening of the US$, GBP has gained 4.7% against the US$ until last Friday.


Sunday, November 27, 2016

Dow - Is Major wave (7) about to end ?

Dow (19,152)

Dow is about 150 points away from reaching the upper trend-line. Is this going to be the end of its major wave (7) ?

If this major wave (7) has only 5 waves and is going to end at 19,300, its magnitude appears to be small,

Unless this major wave (7) has 9 waves or more and continues to zig-zag upwards along its upper trend-line.

Another possibility is for Dow to punch through the upper trend-line.

FBMKLCI (1,627)

In the last 5 trading days, KLCI was able to withstand the dropping ringgit and moved side way. 

My wave count for KLCI remains the same. It is either KLCI has already completed its major wave 4  and is about to complete the wave (ii) of its major wave 5

Or it has not yet completed its major wave 4.

The ringgit is fast approaching its record closing low in 1998. One bullish possibility is an A-B-C formation and the ringgit is about to complete its wave 7 of B to give a double-top reversal pattern.

And of course there is also this bearish possibility that  the ringgit will punch through the ceiling and move into record territory. Under this circumstance my above A-B-C wave count can be thrown away.