Germany, U.K., FLI, and PSE 2-22-2012

U.S. may be back to the bulls, but the major indices in Europe is still facing Medium Term and Long Term Resistances. And at this point in time, and as early as Feb-Mar timeframe, we expect major decisions to where European Market will lead us. Either it broke out of this major medium term or Long term Resistances, or Greece/European fears will be back making this resistance as a failed attempt.

DAX contracted 0.2% last Q4 2011. A bad start for the year, but still, this index continues to rally , 40% from its Q3 2011 lows. DAX long term resistance is at 7300. But in Medium Term, a possible resistance at 7000 is in place, European Indeces are still biased to Medium term downtrend, and cannot still be tagged under bullish scenario, as all index have not made a higher high, or even touched their 2011 highs, and a contracting GDP Country is never tagged as Bullish one.

Long Term: Multi-year downtrend channel still intact. Sideways

Medium Term: Possible resistance is still around

Short Term: 40% Rally from the Q3 2011 lows is weakening, might find a short term peak near 7000.

FTSE also contracted 0.2% last Q4 2011. Same bad start as Germany. The Charts of FTSE is more of a do or die one, as the current level is already its Long term resistance at 6000. (Long term resistance starts from 2007 high down to 2011 high), so a breakout on this level could eaither mean the Country is doing better, or in short out of downtrend bias.

Aside from that, I am seeing a possible Inverter head and shoulder forming, and is currently at the final stages of the Right Shoulder, hopefully this is not a case, as the result of this is Double Dip. I will put 25% chance of this to happen.

Long Term: Multi-year downtrend channel still intact. Sideways

Medium Term: Possible resistance is still around

Short Term: 40% Rally from the Q3 2011 lows is weakening, might find a short term peak near 6000.

FLI alternate count, last week we posted a possible breakout with the 1.21/1.22 support, upon playing with the charts, It seems that this alternate downtrend triangle is the resistance, which pegs around 1.25/1.26, should this confirm a breakout with Volume and buyers on that level, next resistance is at 1.31/1.34.

PSE attained another new All-Time-High. The rally is extreme, but a scary one, its like going to a new restaurant without any idea what to order and how good service is, I still have a HOLD rating on PSE, as we dont know how long it can withstand the new highs, I assume 5k is just around the corner, but the Daily Negative divergence post a threat for correction. Remember what happened to Oct2010 highs, which resulted to a 15% correction. At current 17.5X P/E Ratio, I tag this index as a slightly overpriced index compared to other peers in Asia.

Other Asia Indices (Bloomberg):
HK – 9x

SG – 9x

China – 13x

Australia -13-14x

Korea – 16x

India – 16.7x

Malaysia – 17x

Taiwan – 18x

Japan – 25x