Friday, December 28, 2018

USD/MYR (4.1555) - Evening Doji Star

USD/MYR exchange rate is one of the data that I am monitoring. At the end of November I noticed the formation of a 'Doji' for the month of November. At the beginning of December when USD/MYR  exchange started to move side way I was hoping that the December candlestick can complete the formation of a bearish 'Evening Doji Star' reversal pattern. (Bearish for USD means bullish for the Malaysian Ringgit).

Based on the latest USD/MYR monthly chart up to 27 December, I can see that an "Evening Doji Star' is taking shape. There are two more trading days left for December, the 28th and 31st December, but I don't expect the shape to change much.

Malaysian Ringgit has a chance here to go below 4.0 in the next few month. This should be very good for the Malaysian stock market.

From the monthly candlestick chart for USD/MYR since 1994, the rebound since early 2018 is the wave 2 of C. The next down should be the wave 3 of C, that should bring USD/MYR to below 3.500 from its current level of 4.155.

Another possibility is that the wave 2 of C is only halfway through. It is going for a 'Head & Shoulder' reversal pattern.

For the longer term, instead of a simple A-B-C major wave (2), it can also go for a complex A-B-C-X-A-B-C wave (2).


Wednesday, December 26, 2018

Dow (22,878) - Technical rebound ?

Dow rocketed after Christmas. It surged 1,086 points (+4.98%), Dow's best single-day gain in 10 years. Stocks started to move higher after Trump said he has great confidence in U.S. companies and the market presented a tremendous opportunity for investor to buy stocks. Is he going to support the market at all costs?

Technically it appeared to me that this is a mini wave 4 rebound. Next down will be the mini wave 5 to end the wave iii. After that Dow will have its wave iv and v to complete its major wave 8 that took almost a year to form.

In stock market nothing can be 100% sure as the market cannot exist under a 100% sure condition. It needs buyers and sellers that hold opposite opinion to exist.

As I have mentioned in my previous post, the question is whether Dow is about to complete its major wave 8 or it has already completed its mega wave VII and it is at the beginning of its mega wave VIII (-50%) correction?"

If Dow is indeed at the tail-end of its mega wave 8 and if it can continue to move higher in the next few days, another possibility is that the current rebound is the wave vi of C.

And the most optimistic scenario is of course the major wave 8 correction has ended. Hard to believe, very hard to believe but it is all up to Uncle Trump and the Federal Reserve. Anything is possible in stocks.

A failure C to end the major wave 8.


Monday, December 24, 2018

Merry Christmas & Happy New Year

On the night of Christmas Eve, on the Kuala Lumpur sky, above the eastern horizon we can see the moon, the Orion, Sirius of Canis Major, Procyon of Canis Minor and Aldebaran, the red eye of the Bull (Taurus).

The stars and the moon are beautiful but the Dow is ugly, it continues to move lower. At this moment it is hovering above the 22,000 level.


Saturday, December 22, 2018

Dow (22,445) - How low will it go ?

With the 414 points drop (-1.8%) on Friday, Dow has ruled itself out of the A-B-C-D-E major wave 8's option.

If this current correction since January this year is still the major wave 8, the only option left is an expanding A-B-C corrective wave.

Looking at the longer term 11-year chart, the major wave 2 correction is 13.5%, wave 4 pullback is 15% and wave 6 is 12.5%.

At Friday's closing level of 22,445, the pullback for the major wave 8 so far is 15.67%,  magnitude wise the bottom is about there unless the current correction is not a major wave 8.

Assuming it is indeed a major wave 8, within acceptable limit, 22,000 level can be a possible level to end the wave, that is only another 445 points away. Looking at all the bearish remarks by the financial experts, is this possible when even the former Federal Reserve Chairman Alan Greenspan told CNN recently that the bull market is beginning to fumble? With this week bearish sentiment, the 22,000 level, that is only 445 points away can be broken within a day or two, unless the current sentiment begins to change next week.

So the important question now is whether I have counted the waves correctly that the major wave 8 is about to end and Dow still has a major wave 9 to go in 2019/2020 or I have counted the waves wrongly all these while that in actual fact the mega wave VII has already ended and the mega wave VIII's 50% pullback has already started?


Thursday, December 20, 2018

Dow (22,859) - How is the wave count now ?

Dow dropped another 464 points (-2%) on Thursday giving a cumulative drop of 1,241 points or about 5% in the last 4 days.

Looking at the latest chart I find that I still cannot rule out the A-B-C-D-E major wave 8's option. It can be forming an 'expanding triangle'.

Under this option, wave C has already reached its extreme end, Dow must move up from here. Another 2% drop will definitely ruled out this option.

A more optimistic option is the A-B-C option for major wave 8. Under this option Dow is at the tail- end of its major wave 8 that can end within the first quarter of 2019.

That also means the major wave 9 will start in early 2019 and is expected to set a much greater height than the wave D of the A-B-C-D-E option.

Crude Oil (WTI) (US$46.88) - Halfway through wave E

Since completing its wave D in September at US$73.25, crude oil prices have been going downhill and its has dropped 36% within 3 months.

Hopefully it can complete the wave (i) of E by January 2019 and can start to have its wave (ii) rebound. Wave (iii) of E is lightly to see its price to go below US$30.00.

Saturday, December 15, 2018

Dow - The Outcome

Dow has decided its outcome on Friday with a 496 points (-2%) drop to 24,100 level that punched through the lower support line. No more A-B-C-D-E, major wave 8 formation.

Another 1,000 points drop next week will put beyond doubt for this wave count. With this latest wave formation, the 23,000 level that I have mentioned months ago as the possible end for the wave C of Dow's major wave 8 appeared to be too optimistic unless Trump started to tweet some positive things on US-China trade war.


Saturday, December 8, 2018

Dow - At critical junction.

Dow (24,388)

Dow has a very volatile 4-day week. 5th December was declared as National Day of Mourning to honor the death of US's 41st President, George H.W. Bush.

Dow gained 288 points on December 3 and plunged 799 points on December 4. On December 6 Dow plunged 787 points within the first two hours of trading followed by a surge of 700 points to close the day with a net loss of 80 points. On December 7 Dow gave up 558 points (-2.28%) to close the week at 24,288 for a net loss of 1,150 points or -4.5%.

Despite the volatility, it remained possible that Dow is forming its A-B-C-D-E major wave 8 correction as mentioned in my previous post, provided Dow does not drop below the lower trend line.

Once Dow dropped below the lower trend line next week, I will have to abandon my above wave count and have no choice but to go for the following more bearish wave count.

 And this time around Dow may not stop at 23,000 level.


Tuesday, December 4, 2018

Dow plunged 799 points (-3.1%)

Stocks fell sharply on Tuesday as investor worried about a bond-market phenomenon signaling a possible economic slowdown.The phenomenon happened on Monday when the 3-year bond yield moved higher than the 5-year bond yield.

Under normal circumstances longer term bond yields is higher than the shorter term bond yields as shown below.

When more and more investors are worried about an economy slowdown with expectation of lower interest rate, funds will be buying into longer term bond to locked-in a certain guaranteed return. Demand will drive the bond prices higher and that will lower the yields. At the same time when demand for the shorter-term bonds is lower that will push down the bond price and yield will go higher correspondingly. We will have a yield curve inversion.

Stocks began falling on Tuesday when Jeffrey Gundlach, CEO of Doubleline Capital, who oversees more than US$123 billion in assets told Reuters that this inversion signals a weakening economy. When the benchmark S&P 500 fell below its 200-day moving average, it triggered more selling activated by algorithmic trading (an automatic computer programed driven selling).

Last Monday was the first time in the last few years when 5-year bond yield dropped below the 3-year bond yield.

It may be good to look at impact of 'yield curve inversion' on the previous market's plunge, the 2007's 53% major correction where Dow dropped from 14,093 to 6,626 level.

 Around 8 October 2007 when Dow peaked at 14093, we can see the yields going lower for the 1-year and 2-year bonds.

But further checking revealed that this partial yield curve inversion was there in 2007 and was there for the whole of 2006. In fact the first time it appeared was on 28 November 2005 when Dow was at 10,877 level.

Dow was able to move from 10,877 on 28 November 2005 to 14,093 on 8 October 2007 (22 months period) gaining 3,216 points or 29.5% before Dow finally collapsed and plunged to 6,626.

My guess is within the next two years Dow will completed its major wave 8 and 9 before the final plunge.


Malaysian Ringgit - Is the worst over ?

USD/MYR (4.1448)

Looking at the latest monthly chart for USD/MYR, I noticed that the November candlestick is a 'Doji', a key trend reversal indicator and it was followed by a red December candlestick so far. If the December candlestick does not turned green until end of the month, there is great possibility that the wave ii of C has been completed and wave iii has started and that is going to sent USD/MYR exchange rate to 3.20 level to mark the end of wave iii.

Hopefully mega wave (2) can go for a 100% retracement to the 2.43 level.


Venus is emerging into the morning Kuala Lumpur sky at this time of the year, rising from the eastern horizon 2 hours before the sun. This photo was taken two days ago at about 6.45am in the morning.


Monday, December 3, 2018

Bursa - Where is the bottom

After US and China agreed to a 90-day ceasefire on their trade war at the G-20 Summit over the weekend, Dow future jumped 460 points (+1.8%).

All Asian markets closed strong on Monday.

European market at this moment also traded higher.

The question now is whether US and China will call off the trade war at the end of the 90 days?

FBMKLCI (1,699)

KLCI gained about 20 points or 1.2% on Monday

As I have mentioned in my earlier post, I have 2 possible wave counts for KLCI at this moment.

First possibility is major wave 5 of mega wave (5) formation.

Second possibility is the wave C of mega wave (6) formation.

Hopefully more confirmation from now on is for the first possibility.

Inari Amertron Bhd (Rm 1.88)

Inari moved up strongly today gaining 23 sens (+14%) at the close. Wave B of its mega wave (2) has started. It may or may not go back to its previous high to form a 'head and shoulder' reversal pattern and go for a simple A-B-C mega wave (2).

Or it may go for a complex A-B-C-D-E mega wave (2).

Insas Bhd (Rm 0.74)

The current rebound for Insas can be the wave 4 of C of its mega wave (4).

But if Insas can start to move up consistently, another possibility is the starting of major wave 3 of its mega wave (5). This is a bullish option that is yet to be confirmed at this moment.

I am looking for more confirmation.


Sunday, December 2, 2018

Dow - A diffrent form for mega wave 8

Dow (25,538)

Dow gained 1,252 points (+5.15%) last week. The strong surge has changed the wave form from a simple A-B-C to a more complex A-B-C-D-E major wave 8 formation.

With this change, major wave 8 may take a longer duration to complete but the good thing is we can forget about the projected 23,000 level for the completion of the wave C of the major wave 8. The wave E may end at around 24,500 level.