Europe Review and gameplan(Germany, France, UK) 4-26-2012

Getting back to Europe Region. We will analyze their recent behaviours and somewhat forecast what may happen. DAX (Germany) is still waiting to release their Q1 2012 GDP numbers, while UK contracted 0.2% this Q1 2012. A double-dip Recession since 1970. Although we didn’t feel the pressure as FTSE still gained 0.50% for the night, Germany GDP will be the major direction-go-getter where Europe will certainly be. Overall, All 3 major index are still in Medium Term Uptrend, and Short Term Downtrend biased.

 

Germany contracted 0.2% last Q4 2011,and pressure is on this result for Q1 2012 GDP. If GDP results to be good, there is a good opportunity on BUY near 6400, as DAX is trading near the farther side of the support. And it already corrected 10% from the peak. Once it didn’t hold the support at 6400. A strong double dip may happen.

Medium Term: Uptrend

Short Term: Downtrend

France grew 0.2% last Q4 2011, they are also visible in their GDP Growth. Same as Germany and UK, these 3 go by tandem, if one falls from the cliff, others will surely follow. A good trading BUY near 3000 also if economy gives good result. And may have double dip if didn’t hold.

Medium Term: Uptrend

Short Term: Downtrend

UK contracted 0.2% for consecutive 2 quarters. Making this country in Recession, I hate to say it but in this type of Economic data, a 3^rd quarter contraction usually extends. We will surely know in the coming months where things will go. Same as DAX and CAC, if one breaks down below their important Medium Term Uptrend support, these 3 moves in tandem. Its like 3 different Index, but charts seems to be equivalent to each other. A good trading BUY at 5600 if you are confident that UK will grow, and will double dip once it falls below 5600

Medium Term: Uptrend

Short Term: Downtrend

My Personal Trades for the past 3 Quarters (INDEXES). 4-22-2012

Over the hurdles in the past 2 quarters. There has been times when ROI in Equities are great, and there are times that Bonds return better yields. There have been times also that local (Philippine) stocks are so high that Risk is higher than the reward. There were also times that both Local and Foreign Equities are in tandem with U.S. Equities, but in Asia, only one country left everyone from reaching into new All Time Highs - Philippines.

I can say that this 4 months of 2012, I hardly earned that much in our Local Philippine Stocks Exchange. Since the selloff last Oct 2011, PSE already gained 40%,and continuous to increase the risk without a major correction. I didn't feel it much in terms of quality Bluechips and I continued to avoid it until it melts down. I am not seeing Rewards over Risk in this market. At current 18.6 P/E, I leave it to lucky players who earned in this market and continuous to be an INFINITE like Bullish investors/players .

I cannot just watch people earn in PSE. I moved and preferred to trade Asia Countries/Indexes. I didn't earn much in PSE, but in Asia, ROI in Equity is actually good, for the first 4 months of 2012, I was able to trade and earn 15% already. Not just because Worldwide Equities surge, but mainly because of the "tradable" and "healthy" Markets.

I listed all my Country/Indexes trades below, and you can see how easy and low-Risk yet high Returns can be made thru healthy Markets.

UP-sign = Entered the market
DOWN-sign = Sold off from the market

DOW Elliot Wave Analysis and Forecast short term, PSE update 4-15-2012

U.S. Markets started to correct from its peak, some indicators and Elliot Wave analysis did very well on estimating the short term peak last 13297.

In our discussion today, I have setup 2 type of scenario that might happen in the short/medium term using Elliot Wave theory. Both are bullish type scenario. The charts will be on negative or downtrend biased when sell offs are greater the rallies for e medium term time frame, or in Technical terms, a possible change in direction is when DOW gets below 12200-12500 and breaks below strong. As of this moment, let us not think of it yet, for me,some reasons to be back to bearish : 1. when primary Europe countries announces Q1 2012 GDP in negative territory,making them "in Recession state". Recession - 2 consecutive quarters with Negative GDP. 2. Spain,Hungary, other Emerging European Nation etc declares lack of funds or near Recession status same as Greece. (I will say 30% chance to be bearish,since we are uncertain if Europe really grew last Q1 2012) (70-30 battle for Bulls-Bears).

Let us get back to the current trend - somewhat Bullish.

1st Scenario (80% chance to happen) - Correction is net yet over, Estimating the last Intermediate Wave 2 pullback/correction, it to around 6-8% and 1month timeframe to bottom out, and it had an a-b-c like corrective pattern. If we are going to mimic the wave patterns from the last correction, we just finished wave a down, and wave b small rally, all accounted for 2 weeks, if we say 100% that same thing will happen, we expect a 12500 bottom for a-b-c corrective pattern for Intermediate Wave 4 correction of Primary Wave III uptrend.



2nd scenario - super bullish (20% to happen). Correction is over at only 3.5%. Resume of rally will take place, and Rally like there is no problem/debt issue in Europe and other emerging markets.

In terms of Elliot Wave, this may not be the forecasted pattern due to lack of wave count to fully say that correction is over (a-b-c wave correction pattern). But let us open this possibility of this uncertain market.


For PSE. I have not much things to say on this toppish-look market. Asia had a net of almost 4% correction for the past week, and PSE did only a 1% pullback, and 1% rally, making it back to near its all time high.

I was able to trade HK and AU last Wed (4-13-2012) and went out last (4-15-2012) for a 3% gain. Quite interesting for a 2 day-trade in this volatile market.

Negative divergence of RSI and MACD is still showing weakness, and possible shift in momentum soon. So no BUY recommendations yet. Looking for this market to correct to around 4700-4850 for a healthier long term projection.

Dow Jones Elliot Wave Analysis 4-3-2012

Dow Jones now hitting 52week highs, SPX and Nasdaq as well. But Euro Zone knocking the ceilings off for some Nation concerns. By April end or around 4^th week, it is expected for Germany, London and France to reveal their Q1 2012 GDP. Once this gets into negative territory, Europe will be declared in Recession. Recession is where a country/nation is in 2 consecutive negative GDP levels. We may be optimistic, but at this important event coming, it is not bad to be defensive..

Dow Jones daily Elliot Wave suggested count is now at intermediate wave 3 with a composition of i-ii-iii-vi-v mini waves of Primary Wave III Bull Market. Last week ago, we noted that possible short term peak may be seen, it is overextended by 1-2 weeks. Now it made a new high, but MACD and RSI isn’t. Weekly charts also shows that MACD levels reached to as high as 2010 peak,2011 peak (so another consideration to take into). Currently, we have negative divergence. A short term pullback is once again expected, and the more the rally, the more the correction needed, as of this moment, a good pullback back to intermediate wave 1 is advised (12284), there is another support near 12500 level for this uptrend cycle, a correction to 12284-12600 is a good entry point, and healthy for this market.

Elliot Wave count suggests that we are still in an ongoing Bull Market pattern (80% to happen), and at worst case, if Europe suddenly slips into recession, 20% chance that 4/2/2012’s peak may be a Bear Market Rally.

Let us see in the next few weeks, what the market evolves to.