Dark Cloud is Gone?

The Dow is portraying an interesting picture now! The resistance at 11450 level was broken thanks to the supercharge fuel added on 1 Dec and 2 Dec. Look at the Marubozu candles and volume on these two days. it is sufficient to pull the market out of its gravity zone. so whats next? The Year End holiday season and Christmas holiday are just around the corner. Expect retreating in volume in coming weeks. Window dressing activities will also heat-up during this period. Hence, the upward trajectory in Dow should be discounted. Still, risk seems to be lesser now as the shooting star fear on 7 Dec is conquered by the advancement these couple of days.

Now lets examine Shanghai market. The down trend resistance at 2900 level was also broken thanks to super charged fuel on last two days. Look at the confident marubozus and volume on 10 Dec and 13 Dec. Volume raised by easily 30% from the previous week. This signifies the window dressing activities. Hence, any upward movement should be discounted. Nevertheless, the movement should be monitored as it poses great opportunity upward continuation trend after the temporary correction since early November. The correction, I would believe was part of the profit taking activity by investment communities to realise paper gain wherever possible for distribution and lock in performance. These activities subsided toward end of Nov 2010 with volume retreating.
However, the sky in Hong Kong is still gloomy. the formation of H&S is still in the making. Although the profit taking is subsided as index stabilised with volume retreating, fresh buying is still pending unlike US and China Market shown above.

Conclusion, out of 3 markets we have 2 positives and 1 negative, i would suggest nibbling activities should commence now.

DJI forming Double Top

Dear Readers,

How was your trades over the week? have you taken profit? if not you better do so!

Following from last week analysis of DJI and SSE, i concluded that the risk was not at the acceptable level due to anticipation of major hurdles in coming weeks. Now lets take a look at the chart after one week.

Yesterday (7Dec2010) a "beautiful" shorting star was formed in DJI at 11450 level ie at the previous high on 5nov2010. This is the prelude of a Double Top is in the making. So, if you are short term trader be extra cautious!


Ok lets take a look at SSE. SSE is not going anywhere! Have been moving side-way for a month with volume retreating. Obviously, SSE is awaiting for orders and directive from the market. The phenomenon of i wait for you and you wait for me will persist until clear direction is apparent. Usual year end holiday season is just around the corner. Do not expect any impressive ending of equity market.

I would say high chance of DJI & SSE lackluster in coming weeks before the year 2010 ended.



Huh, look at KLCI this morning, chalking up impressively, +11 points. i have a feeling kindly of like, some pro are pushing up the market to distribute to you. ok! well you could continue to blame why such thing happen in our market. Probably this is against your believe that market is efficient as all information should be reflected in the market. But i think generally, this phenomenon is common in all "small market" in emerging country. Small market is easily "move" by some "big" hand, which hinder the efficient market hypothesis. Imaging this, KLCI market cap at the moment is around RM1 Trillion (=RM1,000 Billion). Just EPF alone its fund size stand at Rm300 billion. If you take into consideration Khazanah, PNB, Tabung Haji and so on what is so difficult to maneuver the market. furthermore they all listen to one boss ie PM.

So be cautious of the invisible hand.

Cheers Happy Trading.

Update on Mr Market's Health

Shanghai has been in 1 and half year bear market! It has broken above the upper down trend line convincingly in mid Oct 2010. However not able to hold it and slip below the trend line again.

Hang Seng seems to be more interesting. After the break above the upper down trend line in mid Sept 2010, it has marched ahead thanks the US QE2 of US600 Billion. Currently support level was formed at 22900 level. But watch out, a H&S formation is in the making. So for short to mid term (up to 3 months) traders beware, the market does offer opportunities at the moment but risk not at acceptable level yet.

Cheers Happy Trading.

Has the market correction completed?

Hi, i m back again.

Market seems to be a bit bullish today, DJI closed with +250 points (+2.3%), marvelous! Is this the sign of completion of market correction due to resurgence news of sovereign debt issue in the PIGS countries in Europe and potential war in Korea. To answer the question, let ask the Mr Market

The DJI weekly chart shown a double top formation at 11250 level which is a hindrance to bullish advancement of DJI. Taking closer look at DJI daily chart shows that DJI is retesting the 11250 level yesterday. Do you think this resistance level will be taken out? My guess is not yet.

11250 level is critical now. Any retracement from this level market will turn in short term bearish again. ie lower high from the previous high achieved on 5 Nov 11440. Hence it is too early to enter the market now. We shall wait for the Mr Market to rebuild his confidence and strengths to cross the 11250 hurdle first. Then we have a more interesting play to look up for.

Following from the analysis above, let take look at local market.

10.35am KLCI + 13.76 points (+0.93%) not to bad, impressive rebound. The play should be cautious based the analysis above. No doubt that a lot of second tier blue chips have corrected to an attractive level. But the play short be quick and window of opportunity may disappear fast should DJI make a U turn tonight. Whether this will happen, you should ask yourself whether there is any favourable events up coming, otherwise, the DJI rebound was merely smoke in the mirror.

Cheers Happy Trading.