Is wave 5 of the major wave (I) about to end ?

At the close of last Friday's trading, most of the Asian Bourses and Dow were still having their respective index being kept within a normal wave 5 formation as shown above. The length of wave 5 has not exceeded that of wave 3 yet. If the ultimate wave form shall remain as only 5 waves with a long wave 1 and short wave 3 and 5, and if there is no extension of the 5 waves to 9 waves, next week may witness the end of the current uptrend since March 2009.

In my June 2 posting, by assuming the length of wave 5 equals to that of wave 3, I have projected some figures as the likely terminal points for some of the indices, and as can be seen from the charts below, a normal wave 5 can be completed by next week to mark the end of the major wave (I) for Dow, to be followed by a major wave (II) consolidation unless Dow and the rest refuse to stop at my projected figures and proceed to develop a magnitude larger than wave 3 to acquire a different wave form as mentioned in my June 4 posting "the right count". Under that scenario, the current uptrend will likely to continue for another 2 months or more.

From Friday's closing of 8763, Dow needs another 237 points to reach 9000.

Nikkei's Friday closing is 9768, with another 232 points it will reach 10,000.

Hang Seng will have to put on another 1,321 to its Friday 18,679 to reach 20,000 next week.

Singapore STI closed last Friday at 2396, it has another 104 points to go to reach its revised 2500 level.
I have projected 1077 for KLCI. Last friday it closed at 1075 with 5 sub-wave i-ii-iii-iv-v as shown above. Wave 5's length is the same as wave 3's lenth at this moment, it is interesting to see how it will behave next week. Its ultimate wave form as usual depends on Dow's behaviour. If Dow cannot punch through 9000, most likely Dow has completed its major wave (I) and the long awaited Wave (II) consolidation is likely to begin.

Badan Warisan Malaysia

I went for a meeting at Bandan Warisan Heritage Services's Office yesterday. The building is located beside Jln Conlay - Jln Stonor junction. As I drove into its compound, wah-lau-eh! Appeared in front of me was a beautiful old colonial Tudor building with a big green field and tall trees. I found out later that it is a 1925 building.

Courtesy of greenselipar.com

Courtesy of Badan Warisan website

Badan Warisan Malaysia is a non-profit organization established in 1983 with the aim of conserving and preserving Malaysia's built heritage. For more information please visit Badan Warrison's website.

Besides the administration office, it has exhibition and conference facilities, a resource centre and a gift shop. I was really attracted by the books and many other items in the gift shop. In the main hall the exhibits were 'lacquered natural items' as shown below of Jurema Walendowsky Baker, a native Brazilian artist and designer.

"Jurema creates her artwork from discarded raw materials like dried coconut and palm tree leaves, as well as other spent flora and fauna. She transforms them into extraordinary pieces of art through her unique and complex lacquer process." You can go to Badan Warisan website for more information on her works.

An 'etched-glass lamps'

In fact I have came across Badan Warisan in 2006 when DBKL has given approval to demolish the Bok House as shown below. Badan warisan was fighting very hard to preserve the building but the Culture, Arts and Heritage Minister Dr. Rais Yatim at that time gave DBKL a freehand in approving the demolition application. He even challenged dissenters to prove that Bok House is of historic value. This heritage minister definitely has his own way of interpreting heritage and historic value.

To me, this building got her death sentence for sitting on a piece of expensive land with very high commercial value. This site is located within 250 meters radius of KLCC.

Bok House was also known as 'Restaurant Le Coq d'Or' from 1948 to 2001. With such a long history, this place must be full of happy as well as sad memories, tales, romances and love stories. And must be a popular place in those days for western foods. Looking at the photo it must be a nice place to bring your love one for a wonderful dinner.


Bok house was constructed by the late Chua Cheng Bok(1926), a self-made millionaire that built the business empire of Cycle and Carriage from repairing bicycles on a street corner.
Bok House was one of the grandest neo-classical mansion in Kuala Lumpur. His love for this building was so deep that he has entered a clause in his will that this house may not be sold for four generations, which was said to last until 2025. No body know what has happened to his will.

A partially demolished Bok House

Thing could have been different if he was of another race but then there wouldn't be Cycle and Carriage, and there wouldn't be Bok House.

The Right Count

In my previous post on June 2, I mentioned about the current wave 5 (for most of the Asian Bourses and Dow) if its length is longer than 3, it is going to be very very bullish. The reason is, based on Elliott Wave Principles, wave 3 can never be shorter than wave 1 and wave 5. The wave count on the left is wrong the moment wave 5 is longer than wave 3. Under that circumstances I will have to change my wave count from 1-2-3-4-5 to 1-a-b-c-2-3 as shown on the right and wave 5's magnitude will be either same as that of wave 1 or 1.618 times of wave 1.

At this moment it is better to be conservative and it is better to assume that the wave form is 1-2-3-4-5 as shown by the figure on the left until such time when the wave 5 is longer than wave 3. The "wrong count" and "right count" as shown refered to condition when wave 5 is longer than wave 3.

Asian Bourses and Dow

It is rather clear by now that Hang Seng and Singapore STI are on the way to complete their respective wave 5. The charts for most of the Asian Bourses are showing a very clear 1-2-3-4 waves unlike Dow that has two possible wave counts as mentioned in my previous postings. The main concern now is after the completion of wave 5 how deep the pullback is going to be. Before talking about that it is better to find out how far the wave 5 can go. For Hang Seng as shown below, the run up to 18,888 (1/6/2009) from March 2009 low of 11,344 is an improvement of 66.5%. It consists of a long wave1 and a short wave 3. Based on Elliott Wave Principles wave 5's magnitude is either equal to that of wave 3 or slightly shorter. 20,000 is the upper limit.

Similarly for Singapore STI as shown below, the upper limit is 2,680.

For Nikkei, I should have drawn two lines forming a wedge instead of two parallel lines. The upper limit following the same logic is 10,000.
If I consider Dow for the option having the same pattern as the Asian bourses, Dow with its 1-2-3-4 wave count as shown below, its upper limit can be 9,000.

For KL Composite Index, the projection is 1,077 that is not very far away.

It is important to note that for all the above to remain valid, wave 5 must be shorter or equal to wave 3. It can never never be longer that wave 3. If in the coming days, wave 5 becomes much longer than wave 3, it is a very very bullish development. I will touch on that later. Look out for volume, a lower wave 5's volume signals ending of a major up trend, a higher wave 5's volume than that of wave 3 signals more good times in front.

General Motors filed for Bankruptcy

General Motors, an auto giant that has been part of American life for more than a century has filed for Chapter 11 Bankruptcy Protection on 1st June 2009, the largest industrial bankruptcy in US history. This will enable GM to proceed with its restructuring plan. The company said it has US$172.81 in debts and US$ 82.26 billion in assets. The US Government has indicated that another US$30 billion will be pumped into GM in addition to the US$20 billion that has already lent to GM. The plan is for the federal government to take a 60% ownership stake in the new GM, the Canadian government getting 12.5%, United Auto Workers getting 17.5% and unsecured bondholders getting 10%. Existing GM shareholders are expected to be wiped out.

Technically the chart formation is interesting. From 1999 January peak of US$87 it formed a 3-3-3-3-3 triangles wave A within a downward channel as shown below.
It was followed by a 19-month wave B rebound from $19.50 (April 2006) to $42.60 (October 2007). That was the last chance for the shareholders to get out before the plunge caused by the financial crisis.
Wave C as shown above is a typical 5 waves with each wave consists of 5 sub-wave. It dropped all the way from $42.60 to 74 cents, the lowest price in GM's more than 100-year history.
Refer to the 3-month chart shown above, the sub-wave v of wave 5 has five mini-waves, the current down wave has to be the last one with the filing for bankruptcy. In Monday early trading, GM opened at 52 cents for a 23 cents dropped from last Friday closing price of 75 cents. For the first half an hour, it moved within a range of 49 cents to 61 cents. It is very likely that this is the last drop for GM.

Wave 5 has started for Hang Seng and STI

On Thursday and Friday Hang Seng put on a total of 1260 points (7.5%) and as shown above, the wave 5 has started and it is likely to reach 20,000. This wave count of waves 1-2-3-4 is the most conservative count but I shall stick with this count until there is sufficient data to knock out this option.

Singapore chart as shown below is the same as Hang Seng, it has also started its wave 5 and it is likely to reach 2,680.

If Hang Seng and Singapore STI are in wave 5, I would like to assume that KL Composte will contiue its uptrend move until such time when Hang Seng and STI have completed their respective wave 5 and have started their respective correction.

Diagonal Tringles

Courtesy of Elliott Wave Dot Net

Triangles are overlapping five waves 3-3-3-3-3 formation as shown above. While going through some of the charts of US stocks, I noticed that most of them are forming triangles. The last leg, wave e is usually not so well behaved, it can fall short and it also can overshoot.

Bank of America's triangles moved in a parallel uptrend channel. This type of triangles does not fall into any category of Elliott. However, based on my past experience, this is a bullish formation. The run up is always very strong upon breaking the upper trendline.

If most of the stocks (5 out of 7 of the stocks that I have been monitoring) are having this wave 1 and a triangles a-b-c-d-e wave 2 formation, does it mean Dow's Wave (I)-(II) option that I have mentioned is a more likely outcome, If that is the case, watch out for the train, make sure everybody is onboard.