Normally we counted this 6months rally to end soon ending Major Wave 3 near 1600. But now, seems that its wave structures inside Major Wave 3 is extending, especially the intermediate wave iii, the 4% correction we had weeks ago was counted as intermediate wave iv, and this final rally should end near 1620-1650 to end Major Wave 3. Quite extended than what we expected.
Taking into short term, we are possibly in the minute wave iii of intermediate wave v. And a small decline of 0.5%-2% to finish minute wave iv, and end a 1%-2% rally to around 1620-1650 hopefully ends this 6months rally. Negative divergence of MACD and RSI on Daily charts still shows something is coming to relax the markets.
P/E ratio - Fairly valued at 14.8x
SPX Monthly Charts above shows that we are inside the Primary Wave III rally, and just only finishing the intermediate wave iii, the anticipated intermediate wave iv correction is being waited by everyone all around the globe. And many are already upset that rallies are continuous even tho many people say "sell in May and go away".
Well, technically speaking,yes, we are in due for correction, but these wave structures of Elliot Wave overextend from time to time, and Negative Divergence already shows some weakness.
Fundamentally speaking, some important schedules to look into this May:
- May 15 - Germany GDP
- May 3rd week - UK GDP, Europe unemployment
Hopefully, the minute wave iv and minute wave v for intermediate wave v end by next week, coincide with May 15. Crossing my fingers that Germany will upset Global Economy.
Australia markets almost did a false breakdown below 5000 level, now its on a sideways pattern on 5000-5180, and we have a target of 5250 resistance once it clears the current resistance.
HOLD - Trade the range 5000-5180 for this 21X market. Lighten once it goes below 5000.
HongKong, the weakest in Asia still is in a very slow Uptrend/Sideways pattern. We noted last week that 21500 is a good entry, and it did made a good bounce back to 23000 in just weeks time, we still see this market as a good trading opportunity. Although we dont see HK to easily break out of 24000, trade the 21500-24000 is already a good return short term.
Fairly cheap at 10x. China news and its index are just dragging HK markets down.
Germany DAX is extending its gains making 52week and all time highs, its resistance is just around 81xx to 8200. Germany is slightly fair valued at 16X P/E, and making Global Economy rally because no bad news over Europe is taking place over the 6 months period.
The dip last Mar-Apr to 7400 was actually a good entry point for the trade the range.
HOLD - Trade the range when it goes below the uptrend channel.
Europe is seeing Bull Market characteristics after making 52 week highs. Its rally since 2009 already made 200% rally from 4000 to 8000.
May 15 is the day where Germany will once again release its Q1 2013 GDP. Everyone expects it to grow around 0.5%. Well for me, Im wishing that it contracts even just a simple Negative 0.2% will do. Just to calm this rally and pose a tolerable amount of correction.
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