Philippines formed a negative divergence since the 15% rally from March to May 2013. Giving up almost 300 pts already since the 7400 high. We still continue to see some weakness on this overvalued (23x P/E) yet strong GDP economy in Asia.
We have a trade the range pattern and suggested support to re enter market at around 6930-7000 level near the 50MA.
If all went wrong, next sideways support is at 6700 then 6400. 6400 has an estimate of 21X P/E. Still above the 15X average in the West, and 18X average in Asia.
Dow Jones continued to make new highs till mid-May, making a 20% rally for the past 6 months. We find the rally too much for the timespan, and the recent selloff may still persist and continues on a sideways to down pattern.
Overall it's a short to medium term uptrend lines are still intact with 15000 as immediate support for thisuptrend.
Regarding EW Analysis, we are anticipating that uptrend may end soon, and is due to for correction. There are 2 cases possibly going to happen anytime soon(50-50 chance):
1. If Dow reaches back to 15452 or above, its trying to finish the minute wave v of this intermediate wave iii rally. Then a sharp pullback.
2. If Dow continues to lower and break below14890-15000. What we are experiencing now is the intermediate wave iv correction which could be ranging from 5-10%, estimate is around 8.9% based on the Oct-Nov 2012 correction.
Long Term Dow Weekly charts, we still see long term uptrend with higher channel nearing highs and is prone to possible pullbacks.
Long term, EW Analysis suggests that after intermiedate wave iv correction, there is still an intermediate wave v rally to end Major Wave 3, then Major Wave 4 and 5 to finish Primary Wave III. Then Primary Wave IV before bull market ends at Primary Wave V.
This could take months or years, depending on wave structures,so goodluck.
A meltdown in Europe especially Recession issues could wreck or shorten this bull market.
Australia's rally since June 2012 is still intact and from our last post, we noted that AU may have a hard time to get out of 5250 level. Priced at 21x P/E, we still suggest to trade the range the AU Market.
Immediate support is at 4950 then uptrend support at 4700.
Germany grew only 0.1% QoQ GDP. Unexpectedly low but on a positive note. France fell out on a recession after contracting 2 consecutive quarters. Although France proclaimed a recession, I wonder why Markets doesnt react yet, maybe they all expect the worst is already here, or Investment companies are slowly getting out of the market.
Technically speaking, Germany is still in good shape for its uptrend, but may get to as low as 8000 in the next weeks to come. Uptrend support for medium term is also at 7750. Germany is fairly priced at 15X P/E. Only growth issues are the problems for now.
HK didnt make out above 23500, the first resistance of this sideways market. I still dont believe this 10X P/E market is still trading below expectations, but o well, this market is a great trade-the-range play every now and then.
Immediate support is at 22000 followed by 21500. I still believe a re entry to 21500-22000 is an opportunity to trade this sideways to up market, with a price target of 23500-24000.
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