Make or Break,Dow Jones and China markets 12-4-2011

GLobal Markets and Dow Jones have peaked short term last Nov 1st-15th at around 12284.
The usual Bear Market rallies ranges from 1-3 months, with an average of 2 months rally. The 20% rally for almost 1 month was a possible Bear Market rally technically speaking. The very very very big question that comes to my mind and everyone's mind, is this a bull trap? Or we are already bullish in the market.

The unexpected drop of U.S. unemployement rate to 8.6% was intriguing. Did the drop really confirmed that Economy was gaining momentum,or was it just people are not claiming unemployment benefits anymore?

Next week is a whole lot of meetings, news , CPI numbers all over the globe. EU Meetings will be at the most critical stage and China will show up its CPI numbers. Expect the unexpected!

1. Bullish scenario - I am unfavor of this, but will share my insights in the case that this would be the result next week. DOW Jones may be medium/long term downtrend, but the short term rally concludes that the rally may not be over yet. the 20% rally looks very impressive, like a bull market behavior, and a good 8% pullback correction did happen. A bullish behavior still. Resistance is at 12000-12284. A breakout of that will temporary lead to 12450 resistance, and a confirmed breakout of 12450 resistance means, we are still in a bullish state. Lots of news could trigger this. Good China CPI, managable EU meetings, a 25bps or 50bps cut of rate in Europe, and a lot more.

2. Bearish scenario - 100% biased to happen. We don't know the results until next week's reports show off. the Bearish news that will make this downtrend continue are ECB disagreements, China bad CPI numbers, unresolvable dues of European Debts, Sending Greece out of European Nation and other probable worst case scenarios. Bearish count can be confirmed once it goes below the higher high, which is at 11200. A break below that could resume this downtrend. :) Watch out also for the first support around 11450, which is the RED short term uptrend line.

My reasons why I am still bearish despite optimistic about resuming to bullish state
- there is still no timetable, and targets for EU resolution
- China GDP is slowly going down, including production and exports imports.
- EUR/USD is attempting to break down the 1.32 mark.
- Greece bonds is running out of time, and the nth bailout wouldnt end this crisis.
- Portugal,Greece, HUngary bonds set to junk, possible next sets of downgrades could happen.
- a ticking timebomb/default could trigger a domino effect selloffs.
- we may breakout of the range, BUT the risks involved in EU will never fade in YEARS time.

My reasons to be bullish
- Improved unemployment rate
- EU willing to cut rates

With the risks involved, please respect my own decision where I stand upon right now...



Talking about the 2nd largest economy in the world. GDP is slowly going down, and may go down further.

SSEC is now at 12.36x PE Ratio, a good one, is also part of the crowd and decision making where will GLobal Markets go. Remember China lending and buying a lot of European bonds,China is one of the large dominos ready to be brought down by Europe if ever worst things happen.

Speaking about the technicals, it is now nearing the 2yr lows at 2300, and has no clear indication of getting a rally. Risk as of now is the breakdown below 2300 level, which could lead to China Bear market and lead it back to 1500 - 2000 levels.

DOW, HSI, DAX daily, DAX weekly, FTSE Daily, FTSE Weekly 11-24-2011

Here are the Equity Snapshots of the major index around the world:

In my own opinion, here is the arrangement where Global stocks follow:
U.S. > Asia > Europe
If U.S. and Asia is in good condition, Europe can be a very small growth, assuming growth is positive.

But the Europe meltdown is dragging all markets with very bad news,like defaults, skyrocketing and bond losing values, GDP getting near 0 GDP. which stands at:
Europe > U.S. > Asia

All Daily Charts looks bullish, since we had an enourmous 12% rally from the Oct bottom. But looking into weekly charts, we may see that worst is yet to come, trends starting to look bearish, and I have put some trendlines where and how low can Equities be medium to long term.

the game gets boring 11-22-2011

GLobal stocks has been very boring lately after hitting 52week high last APril2011. The date of my Post 11-22-11 is even more interesting that the markets.

No one expected the peak to be as short as that, even though I want to be very bullish, looking at the news tell us that something is really wrong in Europe, and they dont want to admit it. I even heard a news that Germany want to get out of the "euro zone", if the news is valid or not, I really admire their courage to say that, Imagine all of the people in your surroundings are carrying extreme virus, and you are the only one left standing tall with lots of energy to do things. Certainly, you would like to get out of the zone and have some fresh air.

Over the couple of months, I have a very limited trade:
- August 2011 - DOW Jones began to fall quickly into a danger zone (sold down 50% PSE stocks, and 10% USD Stocks/Equties)
-Oct 2011 - We predicted the Quarterly Bearish play of the market.
- entered the market at Dow 10,500, and sold at an Elliot Wave Primary Wave B target of 11750-12200. Gained 5-10%.
- End of Oct 2011 - market rallied 12% in 18 days (sold 25% PSE stocks,and liquidated 50% USD Stocks/Equities)
- Nov 2011 - Im sitting here, trying to forecast what's the trend, to know if we see a holocaust in the market, or re-visit the 12900. BUt on a deeper feeling, I am leaning towards a disastrous Primary Wave C bear market to reach as low as 8000-9500.

Cash balance: 80% PSE, 40% GLobal USD (40% remaining in High Yielding Corporate Bonds at 6-8% YTD)

Total bad assets/holdings: 20% PSE, 20% GLobal USD

I am lessening my post, since the typical Primary Wave A and Primary Wave B , the easiest to make money with is already done, and the upcoming scary forecast Primary Wave C is coming with an estimate time of 8mos to 24mos downturn duration, that history tells it is the most hard to make money area. I will be taking a vacation, and waiting for Euro Zone to default,or even finish their business, before I take time to define if its already TIME to get it.

Goodluck and braise yourself for a possible downturn as early as now. Stay in CASH. And I will surely the one to inform you guys, once the reward is greater than the risk. STay Safe!

MEG, BPI, HangSeng 11-17-2011

All PSE companies are nowhere to go, we have been stagnant for 4300-4370 for the past 2 weeks.

Some stocks like MEG and BPI are the only ones who tried to rally high despite European Crisis.

One of the largest property play was MEG, from a low of 1.70s, it went to as high as 2.08 yesterday, For me it is a Very Strong resistance point since it has been a downtrend channel for months time now. See chart.

On my own opinion, its a SELL, but Citisec is promoting that their analysis is a breakout and a trading but, let us see who got it correctly. Trading Buy near the downtrend channel 1.70-1.80.

Meanwhile, for BPI, they got a small Q3 2011 increase YOY, making the fair value at almost the same level, I remember when I sold my stock at 60-61, and it went to as high as 58 yesterday. A selling point? Yes, people sold off the news, now it came back to 55 level, and may be best to avoid this stock, Buy below 50 with BPI’s attitude to increase profits YOY.

Hong Kong Market.

ECB rate cut. HongKong, Australia and Euro Currency 11-4-2011

ECB cut 0.25% rate to 1.25%. What does it mean? Is it good to the economy?

It is somewhat good in the short term, implying that ECB is aggressive into pumping back economy’s strength. This will appreciate EUR vs USD as well even for the short term, but if no good thing is happening, people will lose confidence with the Eur zone, and will not get any loans from Euro, mainly because if a default happens, euro currency will definitely go down to a possible 1:1 vs USD, making a lot of writedowns and currency losses.

What the good thing about this rate cut, is the short term effect, boosting morale, and european confidence, attract more loans and lessen Govt bonds (if loans are overflowing, but if not, will need to create more bonds, to coverup expiring ones). The bad thing is that, this 0.25% rate cut may not be enough, and may need to cut more and close it down to 1.00%, why? USD is only 1.00 rate. Why would companies get a loan on a Euro Zone, with a euro currency, if all expects Euro depreciation in the next years/decade.

After quite some time, expect more moves by the ECB. This should be a coverup, and need more rate cuts or helpful GDP generation tactics needed to boost the economy.

Euro currency which is currently uptrend,but has a high chance to breakdown once it hits below 1.35

Australia Index: 38% Retracement from the Top, and hits 4450, within the 4450-4500 resistance level.


HK Index: Very short term uptrend, but may stop once it hits 21,000 or if drops below 19000.