Watch out for the last train

Dow Dropped 102 points yesterday after it has completed its sub-wave 5 that consists of nine mini waves. If there is no more extension to its nine mini waves, yesterday red candlestick is likely to be its downtrend first candlestick whether its is going for possibility 1, 2 or 3.




Whether it is Nasdaq or S&P 500, the wave forms are the same. This pull back provides good entry point for those investors that are still watching at the sideline. All technical indicators are expected to return to the bottoms except possibility 2 that was mentioned in my previous post where the correction is expected to be short, the indicators may stop halfway.

Snatch Theft

Jamilah Selamat, 31, two months pregnant fell off her motorcycle when a snatch theft pulled her handbag in Ayer Hitam last Sunday, hit her head on a pavement and went into coma and died 3 days later.

Her husband and children

Saripah Mohd Nor, 34, 4 months pregnant, pulled by a snatch theft and fell off her motorcycle at Kg. Padang Raja, Melor. She was ran over by a car travelling in the opposite direction and was killed on the spot.

Deputy Home Minister Jelaing Mersat and Johor police chief, Deputy Comm. Datuk Mohd Mokhtar visiting Jamilah Selamat's family (So caring, so touching, so kind, so....). They announced to the press that Home Ministry will set up a joint committee to come up with a plan to fight snatch thieves and mat rempit (so fast action, so efficient, so....). I usually take what they said as "talk talk only". Just wait and see, you may not hear anything after a few days. There were many cases of death caused by snatch thieves before these two cases. This thing is nothing new in this country. The process is the same, somebody die, YB and police will talk this and that, propose this and that and thing just end like that. Remember the Bukit Antara Bangsa landslide that had taken away some lives, remember the Highland Tower many years ago, remember what the politicians and authorities have said, same-lah, "talk talk only". It is very funny that many VIP and VVIP and authorities incharged are not aware of the actual security situation in this country, or are they just pretend that they are not aware ????

Possible directions for Dow

(Double click on chart for enlarged version)

Possibility No. 1 - Dow has completed its major wave (I) as shown above. Major wave (II) is about to begin. This (II) can either take the form of a sharp in magnitude but short in duration a-b-c formation or a shallow but long duration a-b-c-d-e formation. This major (II) provides an opportunity for those who have not participated so far to board the train.

Possibility 2 - This is a very bullish formation. Dow as shown above has completed the major wave (I) and (II) and has just completed sub-wave 1 of major wave (III). The sub-wave 2 of (III) will take about a week before the dynamic sub-wave 3 of (III) starts to run.

Possibility 3 - This is a very very bearish option. I put in this slim-chance possibility is purely based on some of my other indicator's cycle study. As shown above the formation is typical rebound wave of 3-waves with a short wave (III). This is a major rebound wave (6) of the bear that started in October 2007 as shown in the long-term chart below. The following wave (7) will take Dow to the bottom of 5 at 6,547 or even lower.

There are many other possibilities and whatever is the final outcome it can fit into one of the Elliott's principles.

9th Wave Completed

Dow has just put on 101 points at the close to complete the 9th wave of wave 5 of the major wave (I) for "possibility 1", if it is possibility 1. If this is really the correct Elliott's wave count for Dow (with luck), for the next 20 days or more, Dow should go into major wave (II) consolidation. However if Dow still continues to go up, then forget about all the technical indicator's readings, enjoy the major Wave (III) run up (Refer to possibility 2 in my previous post) until the whole wave (III) is completed.

Has Dow Punched Through The Ceiling?

I have to used S&P 500 chart for discussion because I usually obtained my base chart from Yahoo (with great appreciation). At this moment the last candlestick (4 May's candlestick) for Dow was plotted wrongly by Yahoo. The chart for S&P 500 all the while is quite similar to Dow's chart. However, based on my hand-plot chart, the last candlestick for Dow has its top higher than the upper trend line whereas that of S&P 500 has just touched the upper trend line.

There are two possibilities here, possibility 1 is the same as what I have shown in my previous post except wave 5 is going for nine sub-waves instead of 5 sub-waves. Monday's candlestick formed the sub-wave vii as shown below. Based on this possibility, Tuesday's candlestick has to be either a "doji", a "shooting star" or a red candle down to form sub-wave viii to be followed by another up candlestick (green) to complete wave 5 and the major wave (I). It will drag on for another 3 to 4 days. Major wave (II) correction will easily take 15 to 20 days until all technical indicators have moved to the base again.

However if US market will to surge and to put on another 200 points with another big green candlestick similar to the Monday's candlestick, then the market is already in the major wave (III) as shown below, at sub-wave vii of wave 1 of major wave (III). All technical indicators will have to fluctuate horizontally moving at the upper ceiling for at least another month

In stock market anything can happen, you can never always beat the market.

To recap long-term wave count

The current uptrend since early March 2009 for Dow and KLCI appears to have reached temporary tops based on Elliott's wave count as shown by the two charts above, unless there is a break out to above the fifth wave for an extension for both of them, this is possible but I think the probability is low, the technical indicators have been staying at the top for too long. At this juncture it is good to recap the long-term wave count for Dow and KLCI to have a clearer picture.
Dow has a very long record. Same chart as shown in my older posts, the 1929 Great Depression is the Major Wave (II) correction. The current bear market caused by the US financial crisis has ended the Major Wave (III) and started the Major Wave (IV) correction. Since (II) is a simple sharp (-89%) and short as shown, based on "Rule of Alternation-Elliott", (IV) is expected to be shallow (-50%) and long A-B-C-D-E correction. Wave A took 17 months to complete. Wave B started in March 2009, hopefully it can last until end of 2009.
KLCI was introduced in the 1980's, the record is comparatively short. It was unfortunate that KLSE had discarded the Strait Times Index with 1960's and 1970's records. In the early 1970's there was a big market correction. Since then the recent big correction was the 1997-1998 Asian Financial Crisis bear market as shown below.
Since the 1998 bottom, KLCI has moved in three major up-trend waves until January 2008. Because the 2008 pullback has gone below the top of wave 1, according to Elliott's Wave Principle, the January 2008 peak can either be (a) wave B or (b) sub-wave i of wave 3. Since we are currently in a financial crisis that was ranked second to the Great Depression, option (a) is more likely. KLCI is currently in a Major Wave C, most likely the March - April 2009 rebound is the wave 2 of C. To tie in with Dow, this 2 of C has to be complex in order to have a longer duration.

Roses

Remember that 1962 Bobby Vinton's song.
Roses are red, my love
Violet are blue
Suger is sweet, my love
But not as sweet as you

Roses especially red roses always remind me of this song and it brings back some of my old memories. I love roses since my younger days. Not because of Bobby Vinton's song, it is simply because roses are beautiful and have a nice smell. Off and on I used to buy pots of beautiful roses and tried to grow them but always failed miserably. For quite a long time I refused to plant roses any more. Early this year before the Chinese New Year I went with my wife to Sg. Buloh and I was attracted by pots of large size roses from Cameron. They were so beautiful that I couldn't help and I bought 2 pots back. Same as before, the plants became smaller with time as the new branches and leaves became smaller. The new flowers not only became smaller (the size reduced by 70%), their shape and colour also started to change like the one shown below.

Last month in one of my trips to the nurseries in Sg. Buloh, I meet this friendly man, I was not aware initially that he is an expert in planting roses, I started to tell him my frustration with roses and after listening to my story he gave me three simple tips. First tip was that 'roses need well drained soil' (this one I know). Second tip was to buy a special fertilizer as shown below.

This "Baja Ros Istimewa" is available at Carrefour in Kepong and Tesco near The Curves, Mutiara Damansara. The third tip was to pay Rm 5 to the nursery owner for this bottle (1 litre) of ready-mix liquid as shown below (most likely is pesticide + fungicide) specially made for roses.

I took his advice, I bought the special fertilizer and liquid. Once a week, I sprayed my roses with the ready-mix liquid and I applied one table spoon per pot of the special fertilizer. The result was fantastic, I turned all my sick rose plants into healthy plants with beautiful roses.

One more tip that I have forgotten to mention, don't plant roses that came from Cameron, get those specis from Thailand or Phillipines.