Nasdaq - Can 2,616 level hold ?

Nasdaq dropped another 41 points (1.5%) on Friday to close at 2,643, which is 27 points above its next important support level of 2,616, which is also the minimum target of the 'Head and shoulders' pattern. However, if the market has started its major corrective wave, all major support levels will provide only temporary support before the bear continues with its downward journey.

Richard Russell of the Dow Theory letter says,

"The whole current mess reminds me a lot of 1929-30. After the crash of ‘29, the stock market roared higher, even as the economy was simultaneously weakening. When the great post-crash rally died in April 1930, the market turned down with a vengeance, and the Great Depression began. …The market is probably now in the process of forming a complex top. If the market now turns down convincingly, we could see the beginning of Great Depression No. 2."

Nouriel Roubini, who famously warned of a massive financial crisis in 2006, is also getting bearish.

"Until now, equity prices were supported by better-than- expected earnings, sales and profit margins,” Roubini said. “But all three are under squeeze. With slow global economic growth, they’re going to surprise on the downside. We’re going to see the beginning of a correction that’s going to increase volatility and that’s going to increase risk aversion."

Better be careful.


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A busy week for a 61 years old

At last, I can sit back and relax.
Reading a long email from Pisa while listening to music.

A photo from my daughter

This is what she wrote:

"At certain angles it seems to be peeing around the corner from the church."





"A bit Medieval, a splash of Romanesque, all end with a sprinkle of Gothic topping, assembled under Italian style that is sometimes haphazard, quirky and yet still stylish in a very Italian way."






"I suppose to me, it is endearing, but not as endearing as the Baptistery, which I fondly called the chubby brother of the tower which no doubt has contributed to the design of R2-D2."




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Nasdaq - Be careful

Nasdaq closed with 9 points up at 2,684 a few hours ago, if I am right, there may be another one or two days of up to around 2,700 to complete the nano wave 2 before the starting of nano wave 3 of the mini wave iii. It means by next week it is possible that Nasdaq (Dow and S&P) may start to slide faster and I am sure the rest of the world will follow. I can be wrong, but be careful.

To get out at this level is still not that hurting, don't worry, be happy.





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Nasdaq - Neckline broken

Nasdaq dropped 36 points, 1.3% on Friday to close at 2737, which is about 13 points below the neckline of the 'Head and shoulders' formation, a bearish sign. Its next target is the March's closing low of 2616. A close below this level will provide further confirmation to downtrend. Dow and S&P should move in tandem with the Nasdaq.



I am expecting the dollar index to go below its last month low of 72.834 during its current slide.

A historical moment for China and for Asia.

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Roland Garros - Li Na Wins French Open Title

Li Na, the sixth seeded 29-year-old from Wuhan defeated Francesca Schiavone of Italy with a superb 7-0 tie-break, to win the first ever Grand Slam women's singles title for China.

The score, 6-4, 7-6(7/0).

She is also the first Asian women to win a Grand Slam title.



Those that watched the live telecast final, millions in China, saw for the first time the red flag of The People's Republic of China was flying when the national anthem, March of the Volunteers, was being played.



The celebration in China has started and it will continue until June 6 for the Dragon Boat Festival celebration
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Dow - Nothing has changed

US Dollar Index has started to slide again after its recent high of above 76.

For global markets, I prefer to maintain my bearish view.

I don't think I can write off the 'Head and Shoulders' for the Dow at this moment. For long-term chart where the range of the prices is great, I usually used the semi-logarithm scale.

After the 2007 October's high, the correction so far, Dow is either forming an A-B-C wave major 6 or it is forming an A-B-C-D-E, mega wave (IV).For either case, the next wave down should be wave C and it can easily last more than 18 months.

For Bursa Malaysia, the FBMKLCI composite index may appear to be bullish, but in the last few weeks, its uptrend was not confirmed by the Industrial Index, this is the first time since the December 2008 bottom.

Whenever there is a divergence between the Composite Index and the Industrial Index, based on my past observation, the Composite Index will finally follow the Industrial Index. It happened at the 1997 peak before the market crash; and it has also happened at the 2009 market bottom before the run up. One really has to be very careful about the current divergence.

My current monitoring is focused on the Nasdaq index, as long as the Nasdaq continues to have new low that is lower than the previous low and new high that is lower than the previous high, the down trend is intact. Ultimately it will trigger a panic sell off. It is currently at sub-wave iii of wave1, still a long way to go if I am right.

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Nasdaq - Watch out for possible 'Head and Shoulders'

US stocks closed about 2.2% down, rather sharp. Watch out for a small 'Head and shoulders' reversal pattern. It is possible that the journey to the South has already started since the peak in late April. This can be the mini wave iii of subwave 1 of the major down wave.

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