Dow continues with its major wave (7) formation. Since the third wave, wave (iii), can never be the shortest wave, major wave (7) is expected to have 9 waves.
It is possible that Dow has completed its wave (v) and has started to form its wave (vi). At 19,963 Dow is 39.5% higher than its 2007 historical peak of 14,164. From its 2009 low of 6,547 Dow has gained 193.8%
UK FTSE 100 (7,210)
FTSE at 7,210 is only 7.2% above its 2007 high of 6,659 and is only 3.7% above its 1999 historical peak of 6,950. From its 2009 bottom of 3,512, FTSE has gained only 103%, very much less than that of Dow.
FTSE is likely to continue with its major wave 5 formation with more new historical highs.
German DAX (11,599)
Dax has performed better than Dow in the last 7 years. At 11,599 Dax is 42.3% higher than its 2007 historical high of 8,067. From its 2009 low of 3,690, it has gained 211%.
Same as FTSE, Dax is likely to continue with its major wave 5 formation.
Japanese Nikkei 225 (19,454)
Nikkei historical peak is its 1989 December peak of 38,957. Its 2007 high of 18,297 is still 53% below its 1989 peak. Nikkei dropped a massive 82% from 38,957 to 7,603 after its asset bubble burst in 1989.
At the peak of its asset bubble in 1988, Japan's theoretical land value was 4 times the total land value of all land in the US. In fact the land value of Tokyo alone is more that that of the whole of US. From another real estate bulletin 'the calculated cash value of a single ward in downtown Tokyo-Chiyoda-Ku could purchase all of Canada'.
Actually how high is the land in Tokyo in 1988 ? From a report land in Tokyo Ginza area was selling at US$250,000/sq.m. At currently USD/MYR of 4.46, a 1,000 sq. ft. apartment would cost Rm111.50 million !
Click 'Japanese Asset Bubble' for the article.
I am taking the 2009 low of 7,021 as the end of wave A. Since then Nikkei has completed the wave 1-2-3-4 of its wave B. in 2017 it is expected to continue with its wave 5-6-7 to completed its wave B.
Shanghai SSEC (3,154)
SSEC at 3,154 is 49% lower than its 2007 historical high of 6,092.
It is likely that SSEC has completed its wave B in 2015 at 5,166 level. I expect SSEC to continue with its wave C formation in 2017.
But if I looked at its 158% run-up within 13 months from April 2014 to May 2015, Shanghai market behaved more like a casino at that time with lots of cash at the sideline. Chinese gamblers are ever ready to jump in at anytime for a fast gain. For this reason and also the reason that it is a market tightly control by the Chinese Government, I have a bullish alternative for SSEC as shown below. But I think is unlikely.
A bullish wave 3 of (3) in 2017.
Hong Kong HS (22,503)
HS is likely to continue with its major wave 5 formation.
Its current level is still 26% below its 2007 peak of 30,468.
Singapore STI (2,962)
STI at Friday closing of 2,962 level, is 25.4% below its 2007 historical peak of 3,865.
From its 2007 peak of 3,865, STI plunged downwards forming a 5-wave wave A at 1,485. From there STI has completed a diagonal major wave (1). It completed its major wave (2) in January 2016. I expect STI to continue with its up-trend in 2017 to complete the major wave (3) of its wave B.
FBMKLCI (1,675)
KLCI may or may not move in tandem with the rest of the major world bourses depending on the political situation in this country and 1MDB development oversea.
From the chart shown below, in the last 30 years, KLCI has indeed moving very closely with the Dow except during period of Asian Currency Crisis and in 2016.
Another factor affecting the KLCI is the strength of our Ringgit with respect to USD. My reading is - USD/MYR hit its peak in 1998. It has formed its wave A in 2011 and since then it has been forming its wave B. Currently it is forming the last wave of B, the wave (vii).
From the USD/MYR weekly chart shown below, very likely it has complete the sub-wave iii of (vii). If well behaved, Ringgit will improve to about 4.3 to 1USD to complete the sub-wave iv. Sub-wave v is likely to bring Ringgit to 4.5 to 1USD to complete the wave (vii) as well as the wave B.
The last sub-wave can be quite unpredictable, it can be missing and there can also be a panic, climax sell out.
For KLCI, there are 3 likely scenarios.
a) the most unlikely scenario at this moment. Very bearish. Major wave (5) is completed with a failure wave 5. KLCI has only one direction - down all the way in 2017.
b) a less likely scenario. Bullish. KLCI has just completed its wave 4 and wave 5 has started. The duration and magnitude of wave 4 is too big when compared to wave 2, but is still possible.
c) a more likely scenario. Bullish. KLCI is forming the wave (iii) of 5 of (5).
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