More Bullish Biased (2011-03-31 DJI analysis)

HSI had a big gain yesterday, and it closed at 23451, which is around 150-250 points from the resistance level mentioned in Monday's post. Then we have to see whether the investors could successfully boost the index to higher levels.

Today, let's see how's the US market is doing.



Above chart is the daily chart of Dow Jones Industrial Average (DJI). It had been moving upwards gradually from Aug 2010 to Feb 2011.

Due to what happened in Japan, it dropped dramatically and broke the long term up-trend red line.

Luckily, without more tragedies happening, it started to rebounce in mid-March. And now it is finally back to the level of previous high, and would have to face a big resistance.

In addition, the red line is continuing its up-trend, giving a higher and higher support level to the index. Currently we could expect support at around 12250.

DJI being pushed to the corner, volatility would jump in near future. This aligns with the prediciton on VIX as well.

For sure, if it chooses to break downwards, it could head down to 11,600 until it finds its ground.

If DJI breaks upwards instead, it could get up to around 13,000 given the previous rising trend.

Nevertheless, there is still room for MACD to surge, there isn't much force stopping the index to boost. I will have a more bullish biased view on US stock market.

Another bounce in volatility (2011-03-30 VIX analysis)

Above is the daily chart of Volatility Index of S&P500 Options (VIX). After testing the support level three days ago, the index started to rebounce.

Back to the end of February, VIX broke out and was rising. Japanese tragedy brought the index even higher, reaching 3Q-high.

This high was exactly 50% fibs-level using the highest and lowest level as reference. Then, VIX was unable to climb higher and fell, reaching the support at around 17.4.

I expect the bounce would lead VIX to reach 23.6%-fibs level at around 22.7. So there should be a boost in volatility in coming few days.

Jumping stock? (2011-03-29 0982.HK analysis)

Above is the daily chart of Ione Holdings (0982.HK). This stock surged 15.2% yesterday which attracted my attention. And I discovered its potential to jump.

The price has been sliding along the red down-channel for months. Though it did try to break the channel several times, I didn't see volume accompanying.

This time, however, volume rose as well, not only yesterday but also last week. It seems that corporate investors started working on it after collection period.

Outbreak of channel would be the very first step. The next resistance will be at 0.2. Potentially it could move up to 0.3 or even 0.5.

For the downside, the support level is at 0.119. However, for such stocks, setting certain percentage stop loss would be better to wait for support as liquidity is not high.

Hanging in the middle (2011-03-28 HSI analysis)

Trading hours have been extended for month. Is everyone getting used to it?

There weren't much important things happened last week. Japan's tragedy was somehow settled. I guess at most it would be the protest in London which would lead stock market in London drop. HSBC as the largest component in HSI, this index will be more bearish biased this week.

In fact, it is more-or-less following the trend in technical view.

Daily chart of HSI:


After the great slump two weeks ago, HSI was able to recover most of its loss last week. We can see a very bullish consecutive white candles.

MACD and its EMA appeared to have a bullish cross. This gives investors confidence to invest in the market. That's why we could see the volume last Friday jumped suddenly.

I have identified the red long-term down-trend line as the resistance. This level will be at around 23,600 at which HSI has very high chance to turn its direction.

The support will be at around 22,100 which is the previous low. This level surely has strong support to the index.

Weekly Chart of HSI:


Weekly chart gives clear picture of how HSI will move.

We can see that the index is currently hanging in the middle of the channel. The channel range is quite wide, so the index could hardly find resistance nor support until around 600 points rise or drop.

The purple channel predicts a resistance at around 23,750, and the support would be at around 21,600.

Quite different from daily chart, we could see there is a bearish Moving Average cross on weekly chart. MACD is still heading downwards, showing no bullish signal.

Combining both charts, I would expect short-term rise of HSI, till around 23600-23750. Then it would face huge resistance force and we have to see whether it could go any further upwards.

Important Economic Data this week (2011-03-27)

29-March (Tuesday)
German CPI
07:50 Japan Retail Trade
16:30 UK GDP {Forecast: Unchange}
22:00 US Consumer Confidence {Forecast: Lower}

31-March (Thursday)
15:55 German Unemployment Change {Forecast: Less negative}
20:30 Canada GDP

1-April (Friday)
09:00 China PMI Manufacturing {Forecast: Slight increase}
20:30 US Change in Non-farm Payrolls {Forecast: Slight decrease}
20:30 US Unemployment Rate {Forecast: Unchange}
22:00 US ISM Manufacturing {Forecast: Slight decrease}

Euro on the trend (2011-03-25 EUR/USD analysis)

Above is the 4-hour chart of EUR/USD. After hours of slow drop, there were two big white candles leading the 17-nation currency to higher level.

Obviously, traders have been keeping an eye on Euro. As soon as the price touched the red up-trend line, two white candles immediately followed. It is currently targeting the previous high at 1.425.

The fibonacci projection was drawn using the previous bullish trend. It seems like traders were using this as well, 'cause Euro was resisted by the 61.8% level. Therefore, should this level break, next target will be at 1.448.

Downside will be narrowing due to the up-trend line. Next one is at around 1.4125.

Stock in the week! (2011-03-24 Morning Star Resources Ltd. analysis)

Sorry I had a mid-term examination yesterday morning, that's why I wasn't able to update my blog. Just for a brief update, these two days HSI had a low volatility due to the fading Japanese Earthquake's impact.

Today I am going to post the analysis of a small-cap stock, with potentially high chance of crazy surge: Morning Star Resources Ltd. (0542.HK). I believe some of you might have already heard about this company as it is quite well-known among the travel industry. But its major activities are actually investment holdings and management. (source: http://www.aastocks.com)

Below is the daily chart of Morning Star.



Yesterday the stock price surged 34.4%. This was actually an extremely beautiful breakout as it just reached the long-term red down-trend line. It's a shame that I did not discover this stock before yesterday's break.

Anyway, there is still chance for making money. 34.4% is definitely not enough for those who intend to push it. In fact, when reaching level around 0.128, there was a strong resisting force and stopped the price from boosting further, creating a long upper shadow.

Support now will be at around 0.101. For the upside, should Morning Star break the resistant level at 0.128, it could reach as high as 0.199. And this is only the second stop. Potentially it can even surge to 0.26 and even 0.30.

But let's just focus on shorter term. If the price exceeds 0.128 and stays firmly above it, we could BUY this stock and target at around 0.20. This is around 56% gain.

For stop, I would recommend 10%, which is at around 0.115.

I will consider putting this stock into JPHK after a long time of cash-holding period.

Bearish USD (2011-03-22 DXY analysis)

Above is the daily chart of USD Index. Recently it has been slumping and has just reached a support level.

We could see that the index dropped below the short-term down-trend red line, as well as the previous low horizontal support. These are bearish indications if they are confirmed, by not being able to get back above the line in few days.

Another support will be at 74.17. This level successfully resisted the index once and support the index once too. It breaks only when there is huge movement in USD. So we can treat it as a strong support.

I expect that USD will continue its bearish trend and reach around 74.17. Then there should be a rebounce.

Time to short (2011-03-21 HSI analysis)

It has been over a week since the Japanese Earthquake. The recent concern was whether there would be nuclear explosion or whether the radiation would affect other parts of the world, like Hong Kong. However, it seems like the situation is now under control. Though it is found that water in Tokyo, milk and some vegetables contain radiation substances, I would not expect a huge effect on the stock markets anymore.

Any possible big impacts on the markets would be like a real explosion (which we don't want to see it happen), countries' intervention on Japanese Yen (which has happened actually). So tragedy in Japan would start fading out in the stock markets.

Next would be situations in Libya. It depends on how other countries are trying to stop Qaddafi. US, UK and France have already fired missiles to the country, but the leader appeared to be unaffected and would not stop the war. Oil prices would definitely rally further if the situation is not curbed, and gold would probably follow. Panics continue in stock markets and it is hard for investors to be bull together. In short future, global stock markets could hardly reach higher.

These are the fundamentals. Let's see how HSI would go on technical analysis.

Daily chart:


Hang Seng Index broke the short-term support which did successfully support the index a few times. If the index could not make its way back above this blue line today, we could treat this as breakdown.

Unfortunately, there seems to be no more strong support until around 20,800. Though there is a previous high at around 21,600 that could possible make the index rebound, it are not that strong at all.

MACD is heading downwards, which shows a bearish trend. A bit consolidation may happen for MACD to retreat a bit.

Weekly chart:


Weekly chart even gives a better picture of HSI. 5 weeks ago the index broke the long-term red up-trend support line. Up till now, it still doesn't manage to surge above the line. This breakdown is confirmed. Bearish trend is expected.

I tried to find a support level for HSI. The green line is the only strong one that I could identify. Therefore, it seems like 21,000 is unevitable.

Therefore, it's time to short.

Important Economic Data this week (2011-03-20)

22-March (Tuesday)
17:30 UK Consumer Price Index {Forecast: Slight increase}
20:30 Canada Retail Sales {Forecast: Increase from -0.2% to 1.0%}

23-March (Wednesday)
17:30 Bank of England Minutes
22:00 US New Home Sales {Forecast: Slight increase}

24-March (Thursday)
05:45 New Zealand GDP
07:50 Japan Merchandise Trade Balance Total {Forecast: Increase from -471Yen to 897Yen}
20:30 US Durable Goods Orders {Forecast: Decrease from 2.7% to 1.0%}

25-March (Friday)
20:30 US GDP {Forecast: Increase form 2.8% to 3.0%}

Breaking support (2011-03-17 JPY analysis)

Above is the daily chart of USD/JPY. After the earthquake, Japanese Yen surged due to speculations on Japanese companies repatriating funds to help aid the citizens. The rate dropped largely.

As we can see, it broke the red medium-term up-trend line yesterday, following the great rebounce believed to be because of Japanese Government injecting cash to the economy.

There seems to be support at 61.8% fibs level (around 79.8). However, if JPY remains below the horizontal support at 80.3, it will be following bearish trend and plunge further.

Next support level is at 100%-fibs level (around 77.7).

However, RSI and MACD are extremely low now. So I expect there will be some consolidations along the support at 80.3. Then, a further slump would probably follow.

Ready for crazy markets? (2011-03-16 VIX analysis)

Following the Japanese earthquake, there were explosions at nuclear power plant in Fukushima. Besides direct damage, radiation level is expected to rise in Japan and probably arrive at other places.

With such tragedy, global investors started to panic and the world stock markets plunged greatly. Nikkei fell 10.55%, FTSE100 1.38%.... HSI was able to retreat a bit after reaching as low as 22253 (-4.68%), and closed at 22678. This aligned with the support level at around 22,400.

Nevertheless, volatility in every single stock market jumped. And what does VIX tell us?



Above is the daily chart of Volatility Index of S&P500 Index Options. Not knowing whether it is good or bad, what we know is that it breaks the long-term resistant, and has reached 6-month high yesterday.

Bad thing is that the next resistance is at around 28, which means it still has so room for further surging. Volatility could break higher.

The area from 21-23 becomes a strong support which, we can see on the chart that, did succesfully support the index several times since June 2010.

RSI is a bit high, there might be some corrections given by consolidation along the support area. Nevertheless, it means that the market will be more volatile than that in past few months.

The green line will start to provide support above the area as time passes by. I will further update it in future.

Weekly Analysis on HSI (2011-03-14 HSI analysis)

Let's pray for the people in Japan, especially those involved in the earthquake and tsunami. May God wish them good luck.

Get back to the stock markets. Last week HSI had jumped up but finally slumped due to debt matters in Europe, Libya protests, China's earthquake, Japan's earthquake and tsunami and so on. Despite of what happened in Japan, DJIA still surged 0.5% last Friday. However, this week I will still hold a bearish view on the index.

Daily chart of HSI:


In mid of last week, Hang Seng Index did try its best to break the red up-trend line. This line, as I mentioned last Monday, provided a very strong resistance force to the index. In fact, HSI could not make its way above this line.

Good enough though, there is a short-term support (in green) keeping HSI above 23,200. However, this line is a down-trend line, which gives support at lower and lower levels.

Besides the short-term green line, the lower red up-trend line also supports the index at around 22,900.

Weekly chart:


On weekly chart, HSI is still under the red up-trend line. This is what makes me have a bearish view on the index.

It has reached the end of wedge. I will expect a hugh increase in volatility this week. Support on weekly chart will be at around 22,400.

Next support will be found at 21,000... this will be a big tumble.

Important Economic Data this week (2011-03-13)

15-March (Tuesday)
07:00 Bank of Japan Rate Decision {Forecast: Unchange}
21:15 FOMC Rate Decision {Forecast: Unchange}

16-March (Wednesday)
12:30 UK Jobless Claim Change {Forecast: Drop greatly}

17-March (Thursday)
11:30 Swiss National Bank Rate Decision {Forecast: Unchange}

18-March (Friday)
10:00 German Producer Prices {Forecast: Increase}
14:00 Canada

Volatility matters (2011-03-11 VIX analysis)

Above is the daily chart of volatility index on S&P500, which is often used as a benchmark of the world stock markets' volatilities.

After 3-month consolidation at very low level, this index started to rise. It is currently surging along the green short-term up-trend line, and is expected not to fall below this line.

23.19, same as that last time, is expected to resist the index from boosting further. This is a strong resistance and the bullish side will need very great power to breakthrough it.

If really so, 38.2%-fibonacci level (27.6) will be the next resistance.

On other hand, 20 is the support level given by the short-term uptrend line.

Kiwi (2011-03-10 NZD analysis)

Above is the daily chart of New Zealand Dollor. Kiwi has been sliding along the red channel for a few months.

Three days ago, just after the currency has touched the strong support, it bounced and moved upwards. By the red channel, the resistance is at around 0.744.

Therefore, I would expect a drop after touching 0.744.

If NZD falls below 0.738, it would only be supported at around 0.70. Especially when BNZ announced a lower interest rate.

Reaching resistance (2011-03-09 ICBC analysis)

I was really shocked when I found that HSI went straight up after lunch yesterday. It's really surprising. But now it is even more obvious that the index is facing big resistance now.



So today we would look at ICBC (1398.HK). Basically it is currently facing a strong resistance level; therefore, we could see the long upper shadow candle two days ago and the price jumped till just below the horizontal line yesterday.

I have identified two main trendlines that have much effect on the price movements. The green one is a long-term up-trend line. It has been supporting the price for almost a year. However, I don't think the price would have something to do with this line this time.

The red one is a medium-term down-trend line. Last week, ICBC broke this line and surged further. It shows that the bullish trend is in favor after the breakout, but it might fall back to this line after touching the resistance.

MACD is increasing, which is good; but it is at some high levels, which is bad. I expect the price to have a little consolidation and probably reach 6.0, 50%-fibs level and would bounce.

If the horizontal area breaks, 6.77 will be the next resistance. So it would definitely be a BUY if the price breaks 6.32.

On the other side, when the price falls to 6.0-6.04, we could think of buying the bounce, which is anticipated to go up to 6.2.

Breaking of Gold (2011-03-08 Gold analysis)

Protests in Libya lead oil price and gold price to new highs. Gold price broke the resistance yesterday and recorded new high.

However, we can see that MACD forest is increasing as well, but the difference between the long-term and short-term MA is quite big.

RSI is at around 70 which shows that it really overbought, I somehow doubt that whether it could keep surging.

Nevertheless, I don't think it is strong even to breakout. The price will be falling again unless there is more breaking news from East Asia countries.

Bearish week (2011-03-07 HSI analysis)

Trading time in HK is increased to 5 hours a day. Please be aware of it.

After the government announced giving out cash of HKD6,000, it seemed like everyone was so happy with it and the whole investment atmostpher was quite good.

Let's see how HSI will go next week.

Daily Chart:


Hang Seng Index jumped greatly last Friday, breaking the short-term trend-line for the first time. We could see that 50-day Simple Moving Average acts well to support the index from dropping lower.

The daily chart suggests that the index would be trading in a short range, since it could hardly break both the red down-trend line and blue up-trend line.

MACD is at low level which makes the index tend to go up. But let's look at the weekly chart.

Weekly Chart:


The red super short-term down-trend line works very well to stop the index from surging higher.

The green long-term up-trend line has its job done as well (after the breakdown).

Now both the red and green lines intersact each other, forming an extremely strong resistance for the index. HSI is expected to fall after reaching this intersaction.

MACD is sliding as well, and it is still above zero, providing evidence that the index could hardly reverse its direction to upwards.

Support will be at around 22,600. This is quite strong as it has been providing forces to the index for long time.

Therefore, next week I would expect a drop of HSI to around 23,000 first, suggested by daily week; then possibly slumping further to 22,600 and will be supported.

For the upside, 23,600 will be a stop, which is only 192 points from the index now.

Important Economic Data this week (2011-03-06)

10-Mar (Thursday)
04:00 Reserve Bank of New Zealand Rate Decision {Forecast: Decrease from 3.0% to 2.88%}
08:30 Australia Unemployment Rate {Forecast: Unchange}
17:00 Bank of England Rate Decision {Forecast: Unchange}

11-Mar (Friday)
20:00 Canada Unemployment Rate {Forecast: Decreaes from 7.8% to 7.7%}
21:30 US Advance Retail Sales {Forecast: Increase from 0.3% to 0.9%}
22:55 U. of Michigan Confidence {Forecast: Decrease}


source: http://www.dailyfx.com/

Gold and USD? (2011-03-03 DXY analysis)

Gold price has recorded high, breaking 1,430 level. So I wonder what would happen to the Dollar.



Above is the daily chart of US Dollar Index (.DXY).

I have identified a long-term up-trend line for the index, which was drawn in red. DXY just dropped through this line. We could somehow have bearish view on it, but still have to be aware of false breakdown.

Fibonacci supports the index and provides power to it to bounce back above the line. If we confirm the breakdown, we could expect it to fall to as low as 73.

Breakout of gold price probably leads to retreat of the dollar. So I expect there will be a further surge in other currencies such as EUR and GBP.

Possible jump in VIX (2011-03-02 VIX analysis)

Above is the daily chart of Volatility Index (.VIX). We can see that after the index has jumped few days ago, it eventually fell, but somehow rebounced when reaching the support at around 18 yesterday. The three Moving Averages did provide some support to it as well.

We could expect it to rise more till the resistant at around 23.5 - 24.0. This Friday US will be announcing non-farm payrolls which are expected to have great increase; this should have significant impact on S&P, and hence VIX would probably jump again.

If the index breaks 24, the next resistant level is at 28.

The support level is at 18 and then 15, which is the very low these few months.

Commodities Analysis (2011-03-01 Gold, Silver, Platinum analysis)

Yesterday Hang Seng Index rose 1.42% to 23338. It almost reaches the resistant level.

Without much about stock market, today I made analysis on commodities markets.

Gold:


Gold keeps on surging these days. It finally reaches the level that it has been struggling to break through for a few times.

The difference is, gold price is having a strong upwards trend (short-term) this time. This trend might provide enough power for it to break this hard-to-break level.

Bad things are MACD is at high level, and volume shrinks, showing that investors are not much optimistic on gold price.

If it breaks the 1430 level, we could expect it to rise up to at least1500. If not, support will be at around 1380.

Silver:


Silver is different from gold, it has achieved one-year high few days ago and we could expect it to surge even higher.

I have identified two different trend-lines, indicated in purple and red. They are both pretty strong ones. Now they are getting closer to each other, we could expect big movements of silver price.

Breakdown of the two lines would lead the price to 31; and it could probably go up to 40-45 if brekaout confirms.

Platinum:


Platinum isn't as good as gold and silver. Recently, it dropped below the short-term upwards channel.

Luckily, the longer term up-trend line successfully performs its duty to support the price at around 1770.

We could see that the last candle had a long up shadow, showing that investors are more on bearish side. I could hardly see it keeping on boosting.