Small rebound and Large slump (2010-01-29 HSI analysis)

Red color (Green for China) has been appearing for many days, and HSI has accumulatively slumped over 1000 points. A pessimistic atmosphere has arisen among investors. Good news is that GDP growth in US beats estimates. The markets would have a rebound after the crazy tumble. From technical view, let's see the below:



We can see the fibonacci fan (blue) and the downtrend channel (red). We can see HSI almost meets the bottom line for both analysis. It would have a rebound up, first to the red line and then could go up to the blue upper line. It means that HSI would go up to 20400 or even to 20700. However, the overall trend is going downwards. So for long-term investors, you should be considering whether to sell all your stocks at the rebound and wait till the next sign.

End of Market Rally in US (2010-01-24 DJI analysis)

Why am I using such a pessimistic title? I believe most of you know that Obama is limiting size of banks and prohibiting proprietary trading of some commercial banks. In other countries, like China and U.K., are adding reserve rate. They all want to reduce risk of the banks and to prevent the Credit Crisis from happening again. After the market has become stable enough, governments have to free the market (e.g. pulling out the money they used to "save" the market) and have to take measures to ensure the same thing will not happen again. This is the time when a tumble appears. And it is about time. So, the fundamentals support my title.

In technical views, let's see the below graph.



Firstly, we can see that DJI has dropped through the long-term up-trend line (in violet and dotted). It is a bad sign for DJI. Then, it just passed through the 50%-line, it looks like that it would keep going downwards. The only support is the short-term uptrend line (in blue lines), but it is for short-term only. So we can conclude that, the index may have a bit rebound in short time, but the whole trend has reversed and become a down-trend.

Leads of the drop in the globe? (2010-01-22 CCB analysis)

The world stock markets have been dropping for a few days after China trying to curb record loan growth to cool down the overheating economy. Almost all China bank stocks dropped largely. Questions should appear: when will this crazy tumble stop and when will the stock markets be back to normal? After my analysis on ICBC (1398.HK) on 2010-01-15, today I do one more analysis on CCB (0939.HK). Actually the result is quite similar to ICBC, which showed a reverse sign and should be followed by drops.



However, the difference is, we can see the green channel in the graph beneath, the drop should be more gradual as both line is flatter than that drawn in the graph of ICBC.



From the analysis on two of the representative China banks, we can boldly make a conclusion: the China bank plate would be the one to lead the whole China market or even the globe markets to drop.

Greece deficit-reduction (2010-01-17 EURUSD analysis)

Greece showed the European Commission with a 3-year budget plan including deficit-reduction measure plan. As the IS curve moves leftwards, interest rate goes down and this triggers a drop in EUR (from my Macroeconomics course). After the price had dropped through the uptrend channel as shown in the below graph, the trend for EURUSD has reversed and is going downwards.



The price rebounded after touching the 50%-line and is now going down to this supportive line again. Due to the bad news from Greece, it seems that this supporting line will no longer support the price as EURO is further weakened. It should be a good time for us to short EUR.

Increase in Reserve Rate of People Bank of China (2010-01-15 1398.HK analysis)

Following the increase in reserve rate of People Bank of China, all the China bank stocks had big drop in price. Regarding this, I have done an analysis on one of the representatives of those banks: ICBC. First, we could see that due to the announcement, price of ICBC penetrated through the ichimoku cloud, it looks like that the upward trend of ICBC has finally come to an end.



To estimate the coming price change, we could see the below graph. The next supporting point should be at 5.6, and there would be a very great support at 5.4. However, my suggestion is that as long as there is no sign for reverse of trend, we should not long it as it is quite risky.

Nice pattern (2010-01-12 Gold analysis)

During the three weeks in Beijing, I could hardly access to the internet and check what is happening in Hong Kong and in the world stock markets. So I think I need some time to pick up the recent financial news in the globe. After checking the gold, it seems like the price is roughly the same as that when I left, but actually it was just briefly like what I anticipated on 12-12-2009. The price went down to around 1090 and fluctuated around it. Then it continued to go up again. Now it seems that the price would rocket again. Let's see the below:



We could see that the three curves were quite similar. And the lowest prices for each curves were on a uptrend line. And each time the price could rise through the parallel line which passes through the highest prices of the previous curve. So this time, gold might rise through 1226.10 which is the highest price of the previous curve. 1181.42 would be a strong resisting line due to the great fall before, once penetrated, price would rocket again.