Philippines, Dow Jones, Australia,Germany, HK preview 5-27-2013

 

 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.

SPX,SPX monthly, HK, AU, Germany, Germany monthly 5-6-2013

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.

S&P500 Daily and Weekly, HK and AU Markets 4-19-2013

  

 Hong Kong and China markets became the weakest link these past few weeks/months, hovering the RSI 30 since end of Feb. It attempted to break out of its long term downtrend channel last December but unexpectedly went off and corrected 11.6% (24000 to 21500). The Medium Term uptrend line in blue is a good candidate to BUY into, as its still relatively cheap at 12x PE ratio, compared to other Asian countries.

Once HK returns back above 22000-22500, we can roughly say that its sideways pattern might have ended.

Its still a BUY long term, and Trade the 21500-24000 range.

 

S&P500 made its all time high near 1600, and looking weak when it reached that level, using Elliot Wave analysis, the 5 month rally might pause for a while, and do a sideways or corrective pattern to fix its rally. PE Ratio increased to 14x, roughly priced in values. 

Elliot Wave analysis suggests that we might be in the final stages of Intermediate Wave iii or Major Wave 3, or probably into corrective pattern already to finish Intermediate Wave iv.

Target corrective patterns in case correction already started within the 4% drop.

Intermediate Wave iv - target of 4% to 9.1% = 1530 to as low as 1470  (80% chance)

Major Wave 3 -  1400-1450 (20% chance)

In case corrective patterns dont happen, we can say that bull market rally can extend into few more weeks/months.

 

 Weekly Chart shows that we are probably in the final Intermediate Wave iii or Major Wave 3, or probably into Intermediate Wave iv or Major Wave 4 correction.

Image above shows the entire bull market and Elliot Wave bullet points.

 

Australia market became unpredictable, as its going sideways with weak volume, it may start to decline on the short term channel,and a breakout of 5050 might cancel out this possible short term downtrend channel.

Australia, S&P daily, S&P weekly and HK forecasts 3-17-2013

I apologize for the late posts. I am quite busy lately, and Global Markets extended its rally, and waves are in depth extended as well. We now continue to analyze what happened and might happen in the next weeks to come.

Australia went on to a 15% rally in just 4months, setting a new high for its highest Daily RSI in history at 84. its now at 19x and pretty overbought, a good correction is needed for this market to stay afloat, and must hold near 5000 level support and must not fall back, else we might see 4xxx again.

This market is pretty expensive in Asia, we put a HOLD to AU markets, though a trading range pattern though is in set on 5000-5250 for short term traders.

S&P500 extended its gain and 1% close to 2007 highs, the Dow Jones Industrial already made new highs, and may continue to extend medium term, for now, we continue to analyze the wave extensions we analyzed last January 2013. Rally rally was 4months old, a typical small-medium correction must be heading soon to calm the markets, but before that, S&P may reach new highs first, before any correction may set in. Dow will be the bellwether,since (he) already made a few all time highs in the past week(HAHA)

a good pullback of 3-8% may be good to this economy, to wash of the negative RSI and MACD on Daily Charts.We put 1520 as short term support for any pullback.

Long term elliot wave count suggests that we are in the 5th mini wave of Intermediate iv, and we might see the end of Major Wave iii of Primary Wave III bull market. After Major Wave iii, we expect a 3-8% decline as Major Wave iv, the 3-8% decline was based from the Major Wave ii that happened last 2012.

Assuming there is a pullback of 3-8%, a followup rally is set in place to end Major Wave v of Primary Wave III rally, a target of 1600 is in place for S&P500.

Hong Kong markets fall short after breaking out of the 3yr downtrend line. HK is still cheap in terms of P/E which is only at 12x, but China is affecting its performance to rally like AU markets. We still believe that there's a lot of opportunity in this market, and we set 22,300 as the important support to hold, to make this market float above its margin.

We expect HK market to be bullish long term, and on a sideways pattern short to medium term. Buy into 22,300 if support holds, and accumulate near 21500 for the next support.

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.