Global and Asia Market: Finding a possible short term peak 1-30-2013

For the past 2.5 months, we had a good 12% rally with no definite pause or stop. 2013 January was also one of the best January since the past decades, returning 6% for this month only.

Technically speaking, this is expected as we are currently in the 3^rd leg or wave of the Primary Wave III of Major Wave 3. Wave 3’s are usually the strongest and long lasting in terms of wave structure. Looking at Equities on a Global view, we may need to have a good correction of 3-10% with the ff observations for DOW and SPX:

<![if !supportLists]>-          <![endif]>Dow/SPX when subdivided into micro/minor waves, we are having 5micro waves up inside 5 minor waves.

<![if !supportLists]>-          <![endif]>MACD and RSI for Daily and Weekly charts are Negative.

<![if !supportLists]>-          <![endif]>RSI(5) on Daily charts are at 90. Relatively overbought.

<![if !supportLists]>-          <![endif]>Weekly MACD are in Triple Negative Divergence, while markets reached new high 3 times.

The rally may extend before correction comes, or may correct tomorrow or next week. High probability that after correction, resumption of bull market to finish Major Wave V to finish Primary Wave III. Then meltdown of 10-20% correction is in place(could happen months or quarters from now) which is Primary Wave IV, then ending Primary Wave V with a final rally that could end late this year or next year.

Looking at Asia Pacificthat China’s good 2012 GDP raised the roof of underperforming Countries like HK and AU. Currently, their net gain since Nov low was at 13-14%, outstanding performance compared to the negative 2011 returns for these 2countries.

Looking into their daily charts:

HK – Weak RSI and MACD forming and have a 2yr resistance at 24000-24200 levels(2011 highs). Although we expected China already bottomed last year and is making a comeback, we still seek 24000-24200 level as threat for any strong resistance short term. Although things are possible and relatively cheap at 13x, we are not yet pushing the targets to 26000 level until DOW reaches 14500-15000 level.

AU – the enormous rally from 4350 to 4950 level is a never been seen rally for this country since early 2000 and 2007 peak. 14% was too fast for 2.5months making it have a P/E of 18x. RSI and MACD are also weak having a signal of negative divergence.

Overall, there is nothing to lose to pause for a while and unload 20-50% of overall portfolio, depending in your guts and wait for a good correction to re-enter.