Global Market Outlook for Week Beginning 21st September 2009
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.
3000 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.
Since 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 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.
NASDAQ 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.
Dow 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.
The Worst Prediction About 2008..HAHA…
Here are some of the WORST predictions that were made about 2008. Savor them — a crop like this doesn’t come along every year 
(1) “A very powerful and durable rally is in the works. But it may need another couple of days to lift off. Hold the fort and keep the faith!” — Richard Band, editor, Profitable Investing Letter, Mar. 27, 2008.
At the time of the prediction, the Dow Jones Industrial Average(DJIA) was at 12,300. By late December, it was at 8,500.
(2) “AIG could have huge gains in the second quarter.” — Bijan Moazami, analyst, Friedman, Billings, Ramsey, May 9, 2008.
AIG wounded up losing $5 billion in that quarter and $25 billion in the next. It was taken over in September by the U.S. government, which will spend or lend $150 billion to keep it afloat.
(3) “I think this is a case where Freddie Mac and Fannie Mae are fundamentally sound. They’re not in danger of going under I think they are in good shape going forward.” — Barney Frank (D-Mass.), House Financial Services Committee chairman, July 14, 2008.
2 months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each.
(4) “The market is in the process of correcting itself.” — President George W. Bush, in a Mar. 14, 2008 speech.
For the rest of the year, the market kept correcting and correcting and correcting…..
(5) “No! No! No! Bear Stearns is not in trouble.” — Jim Cramer, CNBC commentator, Mar. 11, 2008.
5 days later, JPMorgan Chase took over Bear Stearns with government help, nearly wiping out shareholders.
(6) “Existing-Home Sales to Trend Up in 2008″ — Headline of a National Association of Realtors press release, Dec. 9, 2007.
On Dec. 23, 2008, the group said November sales were running at an annual rate of 4.5 million — down 11% from a year earlier — in the worst housing slump since the Depression.
(7) “I think you’ll see (oil prices at) $150 a barrel by the end of the year” — T. Boone Pickens, June 20, 2008.
Oil was then around $135 a barrel. By late December, it was below $40!!
(8) “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.” — Ben Bernanke, Federal Reserve chairman, Feb. 28, 2008.
In September, Washington Mutual became the largest financial institution in U.S. history to fail. Citigroup needed an even bigger rescue in November.
(9) “In today’s regulatory environment, it’s virtually impossible to violate rules.” — Bernard Madoff, money manager, Oct. 20, 2007.
About a year later, Madoff — who once headed the Nasdaq Stock Market — told investigators he had costed his investors $50 billion in an alleged Ponzi scheme.
(10) A Bound Man: Why We Are Excited About Obama and Why He Can’t Win, the title of a book by conservative commentator Shelby Steele, published on Dec. 4, 2007.
Mr. Steele, please meet President-elect Barack Obama!! HAHAHA
Source: BusinessWeek
STI has broken the critical support of 2746! Expect more downside risk!
Dow Jones rallied 1.7% to close at 11628 last Friday. However, this increase was insignificant because it wasn’t backed up by strong buying volume. A more likely reason for this surge is due to the US$6 tumble in the oil price. Dow Jones is now experiencing very strong resistance at the downtrend line and 11638 level. Even if this resistance can be broken, it will face another barrier at the 11867 level.
Last Friday, NASDAQ increased 1.4% to close at the 2414 level but with declining volume, which is a negative sign! It’s next resistance is around 2464 level. If this level were to be penetrated, then the next obstacle will be the stubborn 2533 level.
S&P 500 rallied 14.48 points to close at 1.1% higher before the end of last week, but with a shrinking trading volume. It’s next resistance is 1313, after which the next barrier will be 1368.
STI closed at 2723 points last Friday, down 74.2 points or 2.65% for the whole of last week. It has broken the critical support of 2746 and this spells MORE downside risk! The next support is at 2665. If this level were to be broken too, then we can expect another 200 points tumble to the next lower support of 2456!!
A rally in S’pore due to the surged in US market may not be sustainable this week due to the drying up of liquidity. The total turnover last Friday was only just S$864.1 million, below the S$1 billion mark. New money taken in by offshore Asian funds shrank from US$803 million 4 weeks ago to a mere US$22 million in the week ended 13thAugust. With the absence of a significant influx of foreign money, we may not be able to see a sustainable rally in our stock market soon. So the best thing to do now is to still perform “SHORT-SELLING” or “SHORTING” as we can expect more downside since the critical support of 2746 has already been broken for STI.
Cheers 
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.
Can National Day and Olympics bring relief to our battered market?
Dow Jones was down 51.7 pts or 0.45%, closed at 11326 last Friday. The resistance level of 11634 appeared to be a resilient one, which Dow Jones has failed in its another attempt to penetrate it. The next support is at 11125. If this level were to be broken, then the subsequent support will be at 10680. If this critical 10680 level also cannot hold on, then Dow Jones will continue to decline and all hell will break loose 
NASDAQ was down 0.63% or 14.59 pts to close at 2310 before last weekend. It appeared to have found support at the 2258 level of the long term uptrend line. If this level were to be broken with big volume, then the support of 2155 will be revisited again.
S&P 500 closed at 1260 last Friday, down 7.07 pts or 0.56%. It is hovering along the downtrend line, around the 1256 level. If this 1256 level fail to hold, then S&P 500 will have further downside risk. Its next support level will then be 1219.
STI dropped 23.58 pts to close at 2906 last Friday. It failed to penetrate its long term uptrend line and the resistance level of 2961. Watch out for the support level of 2860. If this level were to broken with huge volume, then the next crucial support level will be 2746. If this 2746 level were to be penetrate as well, then the period of time whereby STI plunged almost 30% from a high of 3900 to 2746 were be back to haunt us again
On the eve of National Day last year, STI soared 111.16 pts or 3.4%. Will there be another similar rally this week around National Day? Key earning results of SGX, DBS, UOB & OCBC will be out this week, we will be able to assess how the econmic slowdown has affected the bottomlines of these blue-chips. Of course, the start of Beijing Olympics on 8thAug may also bring about a much-needed rally for the market. If there is really going to be a rebound, then it will be good opportunity for you guys to sell into strenght to exit your so-called “long-term” holdings. Pls remember that even if any rebound were to materialise, it is ONLY a rally in the bear market! I want to stress again:WE ARE NOW IN A BEAR MARKET!
Cheers
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.
Is this Rally for real? Can it be sustained?
Bear market doesn’t drop in one straight line downwards. What happens is that after the stock market has tumbled and hit a support area, it will rebound to stage a bear rally, whereby it will “suck” in ignorant/uninformed retail investors. When the rally cannot be sustained, it will then continue to decline further. Take a look at STI below for an example.
STI melted down almost 30% from the high of 3900 to a low of 2746. After-which, it staged a sucker rally. It tried to penetrate the resistance of 3300 several times, but was all unsuccessful. As a result, it tumbled once again after that.
Dow Jones has rallied for the past few days with increasing volume, showing that the rally is backed up with strong buying. It’s K-line(a proprietary tool of T3B System to assess risk level) is also at the rock bottom, thus signalling that the risk level has already been reduced significantly. Right now, it has almost reached the resistance of 11634. If this level can be broken with significant volume, Dow Jones will experience further upside rally.
NASDAQ has rebounded from its support of 2155 with increasing volume. If the next resistance of 2385 were to be broken with strong volume, it may stage a further rally from there.
S&P 500 has found support at both 1219 and 1256 respectively with huge volume. It’s K-line has also bottomed up. This should propel it to rally upwards to the next resistance level of 1320.
STI will have enough momentum to go even higher if it can penetrate 2961 with good volume, with the next resistance at 3000 points.
US Indexes have been rallying because of falling oil price, FED curbing of naked short-selling for 19 financial firms, corporate earnings are not as bad as what many analysts have expected…etc. Did they rally because the worst is over? Personally, I do not think so. US still has many problems on hand, such the sub-prime crisis, housing recession, inflation…etc., with more write-downs expected to come along the way. So this rally may not be able to sustain for too long due to the weak US economy. For some of u guys who are still holding on to stocks which u bought since long time ago, maybe it is a good time to sell into strength before this bear rally fade away again…..
Pls trade with care, my friend! Cheers
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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