Global Market Outlook for Week Beginning 21st September 2009

September 21, 2009 · Filed Under Investment, Short term - Medium term 

STI

Straits Times Index(STI) is currently facing a strong resistance at the 2700 level. If this ceiling can be broken, 2746 will be the next stubborn resistance. If 2746 can be penetrated successfully, STI may have a chance to hit 3000 before 2009 closes. I do not foresee STI can rise beyond 3000 level by the end of 2009 because the still sluggish real economy simply DOES NOT allow this scenario to play out. In fact, for STI to rally 86% since the March low of 1455, it has already run up too much and too fast ahead of the real economy.

 

SH3000 proves to be a very tough resistance level for Shanghai Stock Exchange(SSE) to crack. It may hover between the 2600 and 3000 consolidation range for some time before it resumes its uptrend to retest the early August high of 3748. The recent 23% correction for SSE is actually a good healthy correction, but it DOES NOT signal a reversal in the long term uptrend for the China stock market.

 

HSSince early March till now, HangSeng Index(HSI) has rebounded 93% and it has just broken its early August high of 21200. With this strong momentum, HSI should have a high chance to head further north towards the next 23300 and 26300 resistance levels before 2010 comes.

 

S&P 500S&P 500 has just penetrated the 1060 barrier and the momentum should see it climbing higher towards the next resistance level of 1168. From the low of 666 in early March, it has only rallied 61% as compared to the impressive rally of 109% for SSE, 93% for HSI and 86% for STI.

 

NasdaqNASDAQ is now approaching a strong ceiling at 2167. Since early March, it has staged a gain of 69% from its low of 1265, beating Dow Jones and S&P 500 in term of % increase.

 

DowDow Jones is now moving feebly towards the critical 10,000 level. This will prove to be a very very DIFFICULT level for it to break. It has only rallied 52% from its low of 6469 and is the laggard among the 3 major US indexes.

 

As we can observe, the Asian markets have outperformed the US market since the start of the market rebound. I believe Asia, especially China and India, and emerging markets will lead the world’s recovery from the financial crisis, instead of the usual US and Europe. Just to quote what billionaire investor and commodity guru, Mr Jim Rogers, had mentioned: “19th century belonged to UK, 20th century belonged to US, 21st century belongs to Asia, especially China”. With US dollar weakening as each day goes by and possibly high inflation coming up, I will prefer to invest my money in Asia and commodities, eg. gold, silver, oil, precious metal, agricultural product…etc, rather than in US and Europe.

 

Disclaimer: Please be informed that the above mentioned stocks/indexes/investment instruments are solely for the purpose of education; it is NOT a recommendation or an invitation to trade/invest. For trading/investment advice, please speak to your remisier, dealer representative or financial adviser. Please understand that there is risk in every trade/investment venture, know your risk first before you venture into any of them.

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