Wednesday, January 2, 2013

AU, SPX Daily,Wkly, Germany Daily,Wkly and HK 1-2-2013


  
As expected, the Global Markets continued to rally into the first few days of the Year. Historically, this has been the scenario,when if markets sold off by Oct or Nov, and valuation is good, jump into the markets as 85% of the time, Markets rally enormously Dec end for Yrend window dressing and until early January for myths that if January net is Up, its going to be Positive for the whole year.

We first tackle AU, We have last seen AU getting from RSI = 30 to RSI = 70 in a matter of 1.5months and 10% rally without any decent pullbacks. This behavior was last seen on 2006 when Global Rally was sceptical. Although Global Markets did a good job on their P/E, I still suggest that this behavior seen in AU can possibly not last long,and may expect some pullback very soon. P/E isnt that good either at 19x.

Every time AU hits RSI > 70, it corrects an average of 5-8%. Last time it hits above RSI 70 was April 2011 and Oct 2012. MACD also reached +50 where historically speaking that rally should pause soon.

Short Term: Uptrend but lighten
Medium Term: Sideways to Up,may revisit 5000 2 yr high soon.
Long Term: Sideways between 4000-5000.




We last tackled Germany last 2 weeks ago,when it was attacking the 5yr downtrend resistance. And after the expected pullback to 74xx, Germany continued to rally and confirmed the breakout. Medium Term down trend was upgrade to Sideways pattern. This was fueled by better GDP of European big 3 (Germany,France, U.K.) due to London Olympics.

Spain and Greece news are now absorbed by the investors in a Neutral way, as people are still awaiting for worse news. Still, Spain and Greece are ticking timebombs,ready to explode and send markets lower.

Our indicators posted that Germany hit RSI >70 twice last Dec 2012. These were never been seen since May2011 and March2012. Negative Divergence on MACD is seen and could have some good correction. P/E is at 13, with some cautious reminder since RSI is high and Negative Divergence is seen on MACD.

Short Term: Uptrend and peakish short term
Medium/Long Term: Broke out of 5yr downtrend resistance, but Germany weekly charts shows Negative RSI. A warning. Next resistance is 7700-8000(2007 highs). I still put warning on Germany/Europe as they even nearly reached their 2007 highs compared to the healthier U.S.


 Germany Weekly Charts


SPX just rallied 2% last night due to Fiscal Cliff deal, and been the expected behavior of US Equities on the first few days of Jan trading. Charts look good, P/E is at 14.8 (slightly above 13.5x average) and may continue to rally into few more days or even up to end of Jan. RSI and MACD of Daily Charts are healthy due to good corrections, and has rooms for more rally. (assuming no bad news).

Short Term: Uptrend
Medium Term: Uptrend with support at 1395




SPX weekly charts on the other story has continuation of its Negative Divergence that caused Nov deep correction, the Negative Divergence effect may not be done,but once we cleared to 52 weeks highs and continue this good rally, the Negative Divergence will be omitted soon.

Long Term: Uptrend with support at 1350


After 1.5 years of being underdog, HSI finally brokeout out of 22,000 and is pushing through the limit to breakout of 23,000 and 23500 to revisit 24000 level. Although we are seeing a downtrend resistance at 23,000 for Medium Term, it likely brokeout of the range and may revisit the next resistance at 23,500.

23,500 level serves many resistance points and factors:
<1. Short Term uptrend channel is very steep and pointing to a probably 23400-23500 top this week.
2 2. Medium Term Downtrend resistance since 2010 top is pointing to a 23000-23500 downtrend resistance.
   3. RSI is in Negative Divergence
   4. RSI never hit 70 this rally

We may see HK and AU correct and shed some of its gains,but surely,HK is now in a better chart/shape to resume its uptrend, as China Equity may already bottomed and started to Uptrend. A Correction to 22,000-22800 is advisable before the next leg of rally. P/E is slightly cheap at 12x.

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