Beijing internship

Final examinations finally end and I would leave HK to Beijing for a winter internship in China Galaxy Securities. So I would not be able to update this blog for 3 weeks. Hope there would not be surprising news in these 3 weeks.

End of Crazy Rise of Gold? (12-12-2009 Gold analysis)

Being in Final Examination period, I could hardly squeeze some time to do analysis and post it on blog. After a whole day of study, I finally manage to find some spare time to analyze Gold. In the past week, dollar rose and commodities like oil and gold dropped. Does it signal the end of the crazy rise of Gold? Let's see the below price of gold.



You can see there are three triangles. The projection bases on the large rise at the first triangle. After breaking through 61.8% line at 1181.6, it seems that the momentum is weakened and it fell, breaking the 50% line and heading to 38.2% line at 1089.2. I anticipate that the price of Gold would reach 1089.2 and fluctuates slightly around this price. Moreover, Treasury Yield Curve steepens by an increase in 10-year and 30-year bond yield. Short term rates are still maintained as low as possible, dollar does not have much signal to rise in short period. So there are no significant evidence to prove that the crazy rise in price of Gold has come to an end.

Rise in Dollar (05-12-2009 JPYUSD analysis)

The "incident" in Dubai has been eased and the stock markets in the globe have become more stable. We could often treat such kind of "incidents" to be some news that are "released" by some insiders to push the stock market down in order to let them buy with cheaper prices. Though what I have said cannot be officially proved (of course), we can tell this through our observations and experiences.

This week's focus is mainly on the forex. The Dollar has risen a lot due to expectations on Fed interest-rate hike. After my personal analysis, I believe this expectations would continue bring up the Dollar, especially versus Yen. Let's see the chart below:



We can see that the price breaks through the upper line of the downtrend. We have to keep an eye on it to see whether it will keep on above the channel or simply a "fake" breakthrough. Also, it breaks the 38.2% line of the fibonacci projections and would likely to go up to 50%, which is at 92.02. If it does, then it could go further more as it breaks the Ichimoku cloud and the trend is reversed and become a up-going signal.

Breaking News yesterday (28-11-2009 HSI analysis)

Dubai Debt May Be Higher Than $80 Billion, UBS Says (Update1)

By Anthony DiPaola and Chris Bourke

Nov. 27 (Bloomberg) -- Dubai, the Persian Gulf emirate whose state-run companies are seeking to defer debt payments, may owe more than the $80 billion to $90 billion in liabilities assumed by investors, UBS AG analysts said.

“Perhaps Dubai’s debt includes sizeable off-balance sheet liabilities that imply a total debt burden well above the $80 billion to $90 billion markets have estimated so far,” Dubai- based real estate analyst Saud Masud wrote in a note. “This could imply that the debt issued by Dubai in recent weeks is insufficient to meet upcoming redemptions."

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Following the news, there were a large decline in the global markets mainly due to the great drop of banks stocks which led to everyone's fear about the future stock markets. HSI could not avoid going downwards on Friday, however, there is a question that everyone would like to know the answer: will this stop here and rebound? or would this news lead to great drop just like bursting a bubble? Let's see the below chart:

We can see that HSI has still not yet penetrated through the Ichimoku cloud. It still shows that the upward-trend has not yet been reversed. However, we still have to wait as it may go further downwards on Monday which may break the cloud. If HSI really drops below 21000 and has no signals of retrieving, please sell most of your stock as the trend has changed to downward-trend.

Drop in Bank stock? (21-11-2009 ICBC analysis)

Stocks in Banking Industry have been dropping greatly these few days after crazy rise in the past month. It seems that the industry is under correction. The below graph is the analysis on ICBC 1398.HK. We can see that after touching the middle uptrend line, the price went downwards, breaking-through the 10-day moving average and aiming at the lower uptrend line.



The first support is at the 20-day moving average which is $6.6. And the second support would be at $6.5 which is the lower uptrend line. The strategy is that if the price reaches 6.6, you can buy in the stock, but not with all the amount you are willing to invest, as some can be left to buy if the price fell till 6.5. Afterwards, some should be sold at around $6.9 to lock profits and we can anticipate a much higher rise till around $7.5, which was the previous highest point in 2007 Q4.

Sinopec Corporation (18-11-2009 0386.HK analysis)

Let me record my analysis on a stock rather than index/forex for the first time. And this stock is Sinopec Corporation 0386.HK.



We can see that 7.256 is a very strong resistant for the rise for the stock, as it had been blocking the rise for three times. However, the base for each drop after the block has been climbing upwards and forming the up-trend line. It would be likely that the stock price breaks the obstacle and has a great rise. Together with the fibonnaci fan, which suggests that the price has been supported by the middle line and would go up to the highest line, it is quite clear that we have to buy this stock.

On the other hand, Sinopec Corp. has fallen behind the HSI (in the one-year analysis). And the clear relation, though not very tight, with crude oil future is also a sign as everyone predicts that crude oil future would keep on rising with gold as a result of the weakened dollar.



The expected price is at around 8.0 and expected return is 16%.

Europe Economy Recession has come to an end (13-11-2009 EURUSD analysis)

Europe’s Economy Emerges From Recession on Exports (Update2)

By Simone Meier

Nov. 13 (Bloomberg) -- The euro-area economy emerged from its worst recession since World War II in the third quarter as exports from Germany and France helped compensate for households’ reluctance to increase spending.

Gross domestic product in the economy of the 16 nations using the euro rose 0.4 percent from the second quarter, when it fell 0.2 percent, the European Union’s statistics office in Luxembourg said today. Economists had forecast the economy to grow 0.5 percent, according to the median of 34 estimates in a Bloomberg survey.

Europe’s economy is gathering strength after governments stepped up stimulus measures and the European Central Bank injected billions of euros into markets to encourage lending. While confidence in the economic outlook is at a 13-month high, rising unemployment, the expiration of stimulus plans and a surging euro are threatening to undermine a recovery.

“The euro-zone economy has officially turned the corner and that is cause for relief, but not celebration,” said Martin van Vliet, a senior economist at ING Bank in Amsterdam. “The economy remains in a fragile state and is recovering mainly because of government stimulus and temporary inventory effects.”

The euro was little changed against the dollar after the release, trading at $1.4874 at 10:30 a.m. in London after rising as high as $1.4902 earlier today. The yield on the German 10- year benchmark bond dropped 0.2 basis points to 3.34 percent.

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After reading the above news about the end of the recession in Europe, we may make some expectation in future interest rates in Europe. As the economy still does not have much signals for recovery, we could not expect an increase in interest rate in a short time. After the news had been released, EURUSD had dropped a bit and this is very reasonable as the interest rate might not change in a short time. I have done an analysis on the EURUSD rate.

It looks like the rate is breaking down through the lower up-trend line, and aiming to go as low as the 50-day moving average, which has been a big support in these few months. To be a more careful investor, the strategy is to wait till the rate goes down to the 50-day moving average, which is around 1.4749, and we could hold long position. Afterwards, 1.504 is a very big obstacle and it would be a nice price to sell some to lock profits.

Everything is clear right now (10-11-2009 HSI analysis)

After days of fluctuations, with HSI touching 65-day moving average line and rebounding, it seems that it is very clear that HSI would be rising up crazily.

Gold has gone beyond $1,100/ounce, and dollar is sliding after G-20 agreement to maintain economic stimulus efforts . As a result, the economic would of course be better and we can predict that the stock market would be rising. If HSI is to be following the trend channel, it would go as high as 23,500. While everything tells us that we should be in long position, what are we waiting for before buying any stocks?

What a fluctuating market (03-11-2009 HSI analysis)

Following the news about CIT's bankruptcy, the stock market has been fluctuating so much that investors could hardly make correct predictions. At this moment, Dow Jones has gone up for about 1.19%. But I think I should focus on Hong Kong stock market first.

HSI was going down and then up and then down again for three trading days, touching the 50-day moving average twice. Together with a fibonacci projections, there would be a very strong support at around 21200. It seems like HSI could hardly drop through this point and it is more likely to rebound upwards along the uptrend channel.

Drop in JPY/USD (29-10-2009 JPY)

After the two mid-term examinations, I finally got some time to do some analysis. Below is a brief analysis for JPY. We can see that after touching the upper line of the down-trend, the rate is going down again. Norway has lifted its Benchmark Rate to 1.5%, becoming the first European central bank to raise the rate after the crisis. It is likely that the other European countries would eventually follow. As there is still no obvious signs for US economy to be recovering nor inflation increases, the rate in the US may not follow what the others are doing.

USD is likely to be weaker in the future, and the other currencies would be likely to advance. Would it be a good time to short JPY/USD?

Important news from Bloomberg (26-10-2009)

Nelson Says Senate to Extend, Reduce Homebuyer Credit (Update1)

By Ryan J. Donmoyer and Dawn Kopecki

Oct. 26 (Bloomberg) -- Senate leaders are negotiating to extend and gradually reduce an $8,000 tax credit for first-time homebuyers through 2010, Senator Bill Nelson of Florida said.

“We should be able to extend that later this week,” Nelson, a Democrat, told reporters traveling today with President Barack Obama on Air Force One to a speech in Jacksonville, Florida.

Senate Majority Leader Harry Reid of Nevada and Senate Finance Committee Chairman Max Baucus of Montana, both Democrats, may seek to add the homebuyers extension to legislation extending unemployment benefits that may be debated as early as this week, according to Regan Lachapelle, an aide to Reid.

Lawmakers are under pressure from real estate agents, mortgage brokers, and homebuilders to extend the $8,000 credit before it expires Nov. 30.

Baucus and Reid made a proposal last week to Senate Republicans that would extend the homebuyer credit through 2010, Lachapelle said. First-time homebuyers who close before April 1 would get the full $8,000, and the credit’s value would be reduced by $2,000 in each successive quarter until expiring at the end of the year.

The proposal was intended to counter one by Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, and Senator Johnny Isakson, a Georgia Republican and former realtor, to extend the full $8,000 credit through next June, and to expand it to all couples earning $300,000 or less. The Baucus- Reid proposal would continue limiting the benefit to first-time homebuyers, Lachapelle said.

Business Tax Break

Baucus and Reid also proposed an extension of a business tax break that allows companies with losses in 2008 and 2009 to amend tax returns for any of the previous four years to get a refund of taxes paid. Without the benefit, companies would have to wait years to apply those losses against future profits.

A version of the benefit was included in last February’s economic stimulus bill, though it was limited to companies with receipts under $15 million. A lobbying effort by business groups, including the Washington-based National Association of Manufacturers, to extend the benefit to all companies failed at the time; the Obama administration has since proposed a broader benefit in its budget.

The terms for extending the homebuyer tax credit are still being negotiated, Lachapelle said.

To contact the reporters on this story: Ryan J. Donmoyer in Washington at rdonmoyer@bloomberg.netDawn Kopecki in Washington at dkopecki@bloomberg.com

A big obstacle (22-10-2009 HSI Analysis)

After touching the 50%-line, HSI dropped a bit. However, it was still inside the uptrend channel. If tomorrow HSI could breakthrough the 50%-line (around 22490), it would be expected to rise greatly to as high as 24000 in the few months. If HSI drops tomorrow, there would be a supporting uptrend line at 21750.

Limited drop of USD against EUR (18-10-2009 Currencies)

After speculation that the Federal Reserve would trail central banks in raising interest rates, USD has dropped to 14-month low against Euro. By using fibonacci projections, there is a great barrier of 50%-line at 1.5058. Together with the block by the uptrend line, I believe the crazy rise would have a pause at around 1.5050. It would be a good idea to short Euro when it reaches this level.

Put now? (16-10-2009 HSI analysis)

Led by the report from JP Morgan Chase & Co., HSI today had a great rise till as much as 22,250.35 at the opening. Unfortunately it could not keep the momentum and dropped till 21,971.48. After doing a analysis on HSI using fibonacci projection in last five years, I have found the 50%-point at 22,393.88. I believe tomorrow (16-10-2009) would have a rise in the opening led by the better-than-estimated earnings by Goldman and better-than-estimated losses by Citigroup.

Gold? Gamble?

Let me draw an analysis on Gold which I believe many people have seen on television or reports by analysts. Including the fibonacci retracements, price of Gold would probably rise greatly till its 168.1%: 1,248.67.

People often say that trading is like gambling, so the following advice is made: Gamble it.

Let's Get Started

Let's start the first post in this blog. I have briefly done some analysis regarding the Hang Seng Index (HSI). The previous high is at 21,929,79. This is a large barrier for HSI. By the technical analysis, HSI should be fluctuating in the rising triangle. Once it breaks through it, it will be rising straightly upwards. However, what we have to be concerned of is the gap of 248.46 on 6/10/2009. It would lead to a significant drop if the gap is to be re-filled.

Until now, there is still no strong evidence to show whether the market is going up or down. I believe it is better for us to lock the previous profits and keep waiting for a while.