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Wednesday, March 23, 2011

Hang Seng Index Danger Ahead?

Today, March 23 2011, Daryl Guppy posted an article titled "Why Hang Seng Could Face Big Losses" at CNBC website.

Below is summary of keypoints to note:





  1. Decline in regional markets started before the Japanese earthquake. These external events, including the attack on Libya, will accelerate existing trends. Fear drives markets, but when it jumps on an existing down trend, the result is more.

  2. Hang Seng's decline started in November 2010. The move below the long term uptrend trend line confirms this long-term up-trend has ended, but it does not signal the start of a new downtrend. This end of uptrend behavior can develop into consolidation, or a sideways movement prior to a continuation of the uptrend.

  3. The failed rally in January 2011 confirmed the second anchor point for the downtrend line. The position of the downtrend line was confirmed with the third failed rally in early March. A strong chart pattern was created = a long-term down sloping triangle, bearish, adds to potential for a new downtrend to develop.

  4. Support is near 22,600. A confirmed weekly close below 22,600 has an initial downside target near 20,000. But 20,000 is not a historical support level, it is near 19,200. Higher probability of falling to 19,200. The triangle pattern is invalidated by a weekly close above 24,000.

  5. Traders and investors who are on the sidelines waiting for a rebound from the over-sold panic initiated by the events in Japan need to apply more careful analysis to determine if the rally is genuine, or just a rally in the context of an existing downtrend.


Wow! Straits Times Index, STI, also topped out in November 2010. (Still remember how I forecasted the November 9, 2010 TOP?).

Wow! I found the “formula” for forecasting the February 18, 2011 DOW TOP!

So, I am very confident my forecast for the Stock Market Bottom 2011 ahead will be correct! Huat ah!

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