Update on US and Asian Indices 11 May 2008

Dow Jones Industrial Index

The Dow closed at the level where the downward trend line from Oct 2007 cuts the upward trend line from the March 2008 low. This level coincides with the 25 day moving average.

This is a support level and we shall see how the Dow goes on Monday. From the USO chart it looks like oil might have topped out on Friday. How will stocks move if oil prices retreat on Monday given that the latest focus and “reason” for the fall in the Dow last week was due to high oil prices?

It is still possible that this drop might be more of a correction than the continuation of a bear trend. One good point supporting this is that the falls in the markets recently have been due to rising oil prices rather than credit crunch and recession fears. This is not exactly new type of bad news and I think that the oil price rise will be dealt with very soon. The USD$ has strengthen quite a bit, hence that is no longer a reason for higher oil prices. Supplies have been hit by events around the world but I get the feeling speculators and traders have been the ones driving oil prices up.

No shorting for me just yet.

S&P 500

The S&P 500 similarly closed at the level where the downward trend line from Oct 2007 cuts the upward trend line from the March 2008 low.

I would like to see more confirmatory signals before calling for shorts at this point in time.

It feels like this might be a correction of the recent rally rather than the continuation of a bear trend.

However all this would change come Monday.

NASDAQ Composite Index

The NASDAQ has been a lot stronger than the Dow and the broader S&P 500. Are investors taking some money off the table from energy and agricultural counters and putting them in technology stocks?

If broad markets were to fall, it looks like technology counters would be the ones with a lot more meat to short.

Straits Times Index

The STI closed on the 25 day moving average. There is however bearish divergence between the index and RSI peaks. Confirmation would be a close below the Friday lows. Support tipped at 50 day moving average and 3000 level (necktie of 25 and 50 MA).

However we must wait for confirmation on both the STI as well as the Dow before shorting. It could very well also be the STI taking a breather before making an attempt to test the 200 day moving average for the first time since the start of the decline since Oct 2007.

Hang Seng Index

The HIS closed on the 25 day moving average similar to the STI. The key psychological level however is the 25000 level. And the HIS managed to eke out a close above it still.

25 and 200 MA are very close together. A rise in markets on Monday (due to a fall in oil?) would have them crossover forming a key area of support/resistance at 25000. Hence not only as a round number psychological level, but also a technical one.

In the event of a fall 23400 would be a support level.

Shanghai Stock Exchange

The SSE has been trading in a range with the 50 MA as the resistance. We will have to watch how the SSE performs over the next week.

Nikkei 225

The Nikkei closed below the upward trendline. Support tipped at the 25 day moving average.

Update on Asian Market Indices 3 May 2008

Straits Times Index

The Straits Times Index has confirmed the double bottom chart pattern. It closed above the 3170 resistance level strongly on Friday 2 May 2008.

Moving in an uptrend. RSI is however getting close to overbought levels. This might be hit come Monday. I will be expecting a throwback soon as well.

Support levels are 3170 and 3000.

SMA/EMA crossover shows uptrend and the SMA and EMA lines are more or less parallel. Still has upside potential but prepare for a pullback once the lines diverge.

Hang Seng Index


The HSI has been trading above the 200 MA for several days now. Also in uptrend. RSI in overbought territory.

Expect a throwback towards the 200 MA.

SMA/EMA crossover shows uptrend. Lines are more or less parallel like for the STI.

Shanghai Stock Exchange

The SSE gapped up and is trading between the 25 and 50 day moving averages. Expect the 25 and 50 MA to be support and resistance respectively.

RSI not yet in overbought territory. More upside noted.


SMA/EMA crossover has not indicated a trend change yet. However the lines appear to be starting to turn upwards.

Nikkei 225


The Nikkei is in an uptrend. But it has not broken above the highs of Feb 2008. RSI in overbought territory. A throwback is to be expected.


SMA/EMA crossover shows upward trend. 10 SMA is starting to diverge a bit more from the EMAs. Still some upside but throwback to follow shortly.

Update on Asian Market Indices

STI

The Straits Times Index is strong. Strong uptrendline holding. Close above the 50 day MA. Very close to confirming double bottom pattern with close above 3170.

Fundamental news wise the Singapore's investment banking fees for the first quarter this year rose 39 per cent year on year to US$203.6 million, the highest first-quarter fee volume on record. This is despite a fall in the total number of deals managed in the first quarter to 124 from 172 in last year's first quarter. The rise in investment banking fees also contrasts with a 5.4 per cent year-on-year slump in investment banking fees generated in Asia Pacific ex-Japan over the same period, data from Thomson Financial shows.

Looks like the Singapore banks are going to rally on Monday! STI will shoot up!



NIKKEI 225
The Nikkei 225 is trading in a descending broadening wedge pattern. It attemtped to test the 25 day moving average. It already tested the 50 day MA once. 2nd time lucky?



SSE
The Shanghai Stock Exchange has a bullish engulfing candle. Is this the reversal? News out that although China's consumer price inflation hit an 11-year high of 8.7 per cent in February, the central bank was prepared to ease monetary policy if necessary to prevent a slowing global economy from cutting Chinese growth sharply later this year.



HSI
The Hang Seng Index broke out of the descending triangle on Friday. Going to test the 50 day MA? Note the possible double bottom formation as well.



KOSPI
The KOSPI has broken out of a descending triangle pattern. It also looks very close to confirming a double bottom pattern. A close above 222 would confirm it.


Overall it looks like the Asian bourses are all looking bullish from the charts as well as the news over the weekend. Is there going to be a major rally next week? Let's wait and see!