Where is the market heading?

2009Sep-Hang Seng zoom in-640×506

Yes, Hang Seng has broke new high, and still holding up strong despite another dip today to close 21472. Nothing bearish about it, HSI went up more then 1000 points, I would see it as a healthy retrace with many taking profit after it shot up so much in 2 days. As I am typing, europe market is down 1%, US futures red. If US side were to end red tonight, 1st magical number to look out for will be 21320. Even if it breaks, uptrend is still intact. HSI trending very nicely in an upward channel.

2009Sep-S&P 500 ZOOM IN-640×603

Yes, S&P 500 broke new highs too! The same for Nasdaq and DJI. US $ has been weak the whole weak, thus pushing US market (And I believe the weak dollar has helped HSI broke new highs too as HKD is pegged to the USD). 1st magical number to look out for S&P 1056! Expect a rebound around that area, hopefully able to hold. Nevertheless, uptrend is still intact until 6 months support line is broken.

2009Sep-Straits Times zoom in-640×506

Disappointed? Why is STI not breaking through 2700 despite global markets breaking new highs? STI could be the 1st market to peak, if it still does not break 2700. But after doing some waves count, it seems like there is still upward potential. Has minor wave 4 complete? Or are we seeing a deeper wave 4 correction? As US market is down tonight and a high chance to close red, I would expect STI to gap down to complete minute c of minor wave 4. Magical number to look out for 2633 to complete minor wave 4, and then we might see STI rebound back to break 2700 to complete minor wave 5 and major wave 3. Another reason for STI to pull back again from 2699 last week was partly due to the long weekend where many would not want to hold there shares for so long, thus heavy selling and profit taking. People are anticipating a double/triple top too, thus heavy selling and shorting at that area.

Food for thought: As SG goes into the long weekend holiday, BBs might be luring in the shortists by making the market look weak. Expect alot of panic selling tomorrow morning with shortists opening more short positions. We might see a strong rebound tomorrow afternoon due to BBs buying and shortist following to cover to push the market even higher.

Going forward: The week ahead..

Alright, this week we could see some heavy buying probably at the end of the week, and continuing into next week till the end of the month due to window dressing. End of 3rd quarter. Datas positive, companies and banks are stronger now with more cash and banks have recapitalised. Fundamentally, everything has changed since the fall of Lehman brothers. That was the worst that could happen. (What can be worse then a bank falling?) Going forward, I don’t think the market will dip back to march 09 period, YET. At least not in the next 1 or 2 years. Central banks around the world are coming together, to stablise the economy through fiscal and monetary policies. With so much intervention (keynesian’s theory), I believe even if a correction was to come, it will not be gloom and doom. I would not be surprised in a V-shaped recovery now (and it really seems like it) and a start of a new bull run.

Of course, the current intervention now could be the start of a new bubble, and the massive printings of USD, what will happen? A weak USD will also mean a fall in valuation for the huge amount of bonds china, japan and many of the countries are holding. And lastly, an economy war between china and US and fighting for supremacy? Or has it started already?