Important Economic Data this week (2011-07-31)

1-Aug (Monday)
09:00 China PMI Manufacturing
16:30 UK Purchasing Manager Index Manufacturing {Forecast: Slight drop}
17:00 Euro-Zone Unemployment Rate {Forecast: Unchanged}
22:00 US ISM Manufacturing {Forecast: Slight drop}

2-Aug (Tuesday)
12:30 Reserve Bank of Australia Rate Decision {Forecast: Unchanged at 4.75%}
17:00 Euro-Zone Producer Price Index {Forecast: Slight drop}

3-Aug (Wednesday)
17:00 Euro-Zone Retail Sales (MoM) {Forecast: Big rise}

4-Aug (Thursday)
06:45 New Zealand Unemployment Rate {Forecast: Slight drop}
12:00 Bank of Japan Rate Decision
19:00 UK BOE Rate Decision {Forecast: Unchanged at 0.50%}
19:45 European Central Bank Rate Decision {Forecast: Unchanged at 1.50%}

5-Aug (Friday)
19:00 Canada Unemployment Rate {Forecast: Unchanged}
20:30 US Change in Non-farm Payrolls {Forecast: Big rise}
20:30 US Unemployment Rate {Forecast: Unchanged}

Short Kiwi? (2011-07-29 NZD analysis)

Out of my expectation, the data announced was surprisingly quite positive. Most stock indexes were stable and HSI broke the first down-trend resistant. The next resistance is at around 22,750.

Today I will talk a bit on Forex.

4-Hour chart of New Zealand Dollar (NZD):


NZD has been moving along the red upwards channel for two weeks, and just broke the lower up-trend line to a lower level.

Besides the red channel, 20-day Simple Moving Average well supported New Zealand Dollar several times, but was not able to do so yesterday.

The break down means a change in general trend from bullish to bearish. Next support should be the 50-day Simple Moving Average which is at around 0.864, but its relatively weak.

And then by identifying more trend-lines, I found strong support at 0.85, and ultimate support will be at around 0.82 (currently, it is rising obviously).

It is a good time to short kiwi. Even there might be some rebound at 50-day SMA, the trend has changed and it is quite likely to drop to 0.85.

Profits in short period (2011-07-27 Wing Hing International (Holdings) Ltd. analysis)

Above is the daily chart of Wing Hing International (Holdings) Ltd. (0621.HK). The group's main works are the operations of coal mines and leasing of mining licenses in the People's Republic of China (the "PRC") and sale of mineral products. (from http://aastocks.com)

Starting from few years ago until 2009, the stock had been moving sideways and had extremely low volatility. In 2009 to beginning of 2010, the price boosted. Especially in 2010, it is quite obvious there corporate investors were trying to lift the price.

Nevertheless, when the price reached 0.50, the stock started to move sideways again. This was because 0.50 is an important boundary, spread widens and it takes more time and money for those rich investors to bring the price up.

While we might suspect that shares were being dumped after the rise in early 2010, recent movements proved the opposite.

In April 2011, the price rocketed to as high as 0.81. Obviously, rich investors were still holding their shares, and they would like to find out how large the selling force is at the high. This is to prepare another crazy surge in near future.

This time the price will break 0.81 and could reach 1.0, which is another spread boundary. And this stock is good to buy as it would probably give you more than 40% profits in less than one month.

But again, remember to set stop-loss for such kind of stock.

US Dollar? (2011-07-26 DXY analysis)

Above is the daily chart of US Dollar Index (.DXY). Thanks to ease of debt concerns in Europe, and worries about debts in US, the Euros have been strengthening, leading to fall in USD Index.

We can see that the index was moving in a narrowing range last two months, before breaking down last week.

The break down was confirmed as DXY remained below the flag for three trading days. It will undergo another bearish trend again.

Next support is undoubtedly the previous low at around 72.8. This is definitely a strong one as many investors might try to buy at bottom.

However, using technical analysis tells us that the bottom should be somewhere lower. The flag started at this level, and break down means that the index will plunge to levels under the flag. So I will be even more pessimistic on the dollar.

Purple line is the resistance, a very short-term and not-too-strong one. DXY has reached it and should probably start to fall.

Ironically, slumps in Dollar usually mean surges in stock markets, which are exactly the opposite of what I expected (or what I wrote yesterday)... we got to see the economic data this week...

BIG Drop! (2011-07-25 HSI Analysis)

Last week Hang Seng Index (HSI) jumped on Friday and reached the down-trend line at around 22,450. Also, on Tuesday post I talked about drop of VIX and the global stock markets appeared to be quite flat last week. This coming week will be another boost of Volatility and the indexes are expected to be moving quite fast.

Daily chart of HSI:


Due to the ease of debt concerns in Greece, and some excellent profits announced by large companies like Apple, HSI surged. The rise stopped at the red down-trend line.

Reaching this level, the index is more likely to fall again as there are no signs of extremely good news popping up this week.

In fact, some important economic data will be revealed, and so far the experts did not have positive expectation on such data.

For example, UK GDP (QoQ) announced on Tuesday is expected to have dropped compared to that last time. Such bad news will definitely pull the stock markets down.

US Durable Goods Orders and US GDP announced on Wednesday and Friday are other examples that should keep dragging global indexes to lower levels.

Together with the analysis on VIX last week which showed that the volatility should surge again this week, we can conclude that this week's HSI should be bearish.

Green line is the support, which is currently at around 21,300. This is expected to be the first stop of plunged of HSI.

Weekly chart of HSI:


The green line is obviously that one on daily chart, and the next support is 21,000 given by the middle line of pitchfork.

One more support that worth talking about is the fibonacci level. Taking the orange flag into consideration, I applied a fibonacci projection using the high and low which first touched the two lines, and the 0% was set on last level that touched the orange line before breakout.

Interestingly, the 100% was exactly at the high in late 2010. 23.6% appeared to be a strong support to the HSI currently. 0%, which is at around 20,800, will definitely be another support. So the index will face huge buying power at 20,800 - 21,300.

If HSI slumps, we can expect it to reach around 21,000. So my thought about this week's Hong Kong market is around 1,400 points down.

Watch out guys.

Important Economic Data this week (2011-07-24)

26-Jul (Tuesday)
16:30 UK GDP (QoQ) {Forecast: Drop by more than half}
22:00 US Consumer Confidence {Forecast: Slight decrease}

27-Jul (Wendesday)
Germany CPI {Forecast: Unchanged}
09:30 Australia CPI (QoQ) {Forecast: Drop by more than half}
20:30 US Durable Goods Orders {Forecast: Great drop}
20:30 US Durables Ex Transportation {Forecast: Slight drop}

28-Jul (Thursday)
05:00 Reserve Bank of New Zealand Rate Decision {Forecast: Unchanged}
07:50 Japan Large Retailers' Sales {Forecast: Less negative}
15:55 Germany Unemployment Rate {Forecast: Unchanged}

29-Jul (Friday)
20:30 Canada GDP (MoM) {Forecast: Slight increase}
20:30 US GDP (Annualized) {Forecast: Slight drop}

Time to turn (2011-07-21 GBP analysis)

Singamas Container (0716.HK) which I analyzed on Tuesday finally broke down and closed at 3.21 today. It was supported well by 150-day Simple Moving Average. Whether it could climb higher depends on the power of resistance at 3.50.

Today let's see the British Pounds.

4-Hour chart of GBP:


After dropping to below 1.578 due to the low interest rate in UK, GBP started to climb again following the green up-trend line which is quite steep.

It retraced back to around 38.2% fibonacci level and faced resistance there. We could see 1.62 seemed to be a strong resistance level.

Other than the fibonacci, longer-term red down-trend line is also an extremely strong resistant to sterling.

Therefore, it is more likely that the pounds would drop or consolidate after having reached the red line. It could be back to 1.60.

Stocks' consolidation (2011-07-20 VIX analysis)

Above is the daily chart of Volatility Index (.VIX). With the consecutive large black candles last week, the Index inevitably sparked, reaching as high as 21.93.

Still it was resisted by the red down-trend line, and turned its direction after touching the line. This was what I have predicted on the thread on 8-July.

Now the index is more likely to fall back to the level of 15.5, which has been an extremely strong support to VIX from last Dec 2010 (although the index once broke down in April 2011, we could see its power from May to Jun).

Falling in VIX signals a consolidation of S&P500. This makes sense as it is time for it to take a rest after a week full of bad news. There aren't many important economic indicators revealed this week so the global stock markets are less likely to be influenced heavily by bad figures.

Once the index drops to 15.5, something gonna happen again, which should be at least after this week. So be prepared for next week's fight.

Look more bearish (2011-07-19 0716.HK)

Above is the daily chart of Singamas Container Holdings (0716.HK). It primarily focuses on manufacturing containers and providing logistic services.

Recently the stock price has been surging greatly along the green up-trend line which is quite steep. This line provides support to the price.

On the other hand, the red solid line is the resistant stopping the price from going any higher.

Now we can see that the price has moved to the interception of the two lines, which means that it would have to break either side.

Support is at 3.30 and resistant is at 3.42. If it breaks out, then of course we can buy this stock. If it goes down instead, then we can short it.

Apart from the flag shape, the stock price was resisted at 3.50 twice. This might possibly be a bearish flag signaling bearish continuation. So going downside is more likely then rising this time.

Bearish week (2011-07-18 HSI analysis)

Filled with lots of bad news and scandals, global investors were not looking too good on the stock markets. Italian bonds rose greatly due to concerns on financial debt problems. US was talking about raising debt ceilings. Regarding these, it is more likely that stock markets this week would not be too bullish.

Daily chart of Hang Seng Index (HSI):


HSI was still in the middle of the red and green lines, showing no breaking pattern. I have drawn a few down-trend lines that possibly affect the movement of the index.

For the downside, the green down-trend line will help support HSI at the level of around 21,400. Once this support breaks, the next support would be so far away, possibly at around 20,500.

For the upside, the red lines are all resistances. A short-term one is found at around 22,350. Then 22,500 will be a very strong one (that's why I drew the line in solid).

MACD is moving downwards below zero, but it is still not too negative, it doesn't provide much information.

Weekly chart of HSI:


The red and green lines are the same as those on daily chart. Besides that, a pitchfork was used to predict the movements.

Other than 22,500 as predicted using red down-trend on daily chart, the upper line of pitchfork at around 22,900 is treated as an extremely strong resistance to the index. Once break, HSI could surge greatly.

Last week, HSI was well supported by the green down-trend line. If this line breaks, then we can expect another strong support at 21,000, provided by the lower line of pitchfork.

To conclude, given the bad conditions and investing environment, I carry a more bearish view on the index this week. 21,000 is a strong support so there should be a bounce at that level.

Important Economic Data this week (2011-07-17)

19-Jul (Tuesday)
17:00 Germany ZEW Survey (Economic Sentiment) {Forecast: Drop}
21:00 Bank of Canada Rate Decision {Forecast: Unchanged}

20-Jul (Wednesday)
16:30 Bank of England Minutes
22:00 US Existing Home Sales {Forecast: Slight increase}
22:30 Canada Monetary Policy Report

21-Jul (Thursday)
15:30 Germany Purchasing Managers' Index
16:00 Eurozone Purchasing Managers' Index

22-Jul (Friday)
19:0 Canada Consumer Price Index {Forecast: Slight drop}

Gold price due to QE3 (2011-07-15 Gold analysis)

Above is the daily chart of Gold (XAU). While Bernanke said that currently Fed had no plan for launching QE3.0, the public believed the stimulus program was quite likely. Gold price soared as a result.

Gold price has been within the the green flag for a few months. In general, this green area could be treated as a bullish flag which indicates further surge of gold price.

The flag broke few days ago. XAU surged and recorded new high. I tried to use fibonacci projection to predict resistance levels, and found that 1,613 should be a strong resistance. 100% level is at 1750, whether it can be reached depends on the progress of QE3.

Currently we can see that RSI and MACD are at high levels. Gold price would take a little rest before moving higher. There might be a little drop like that in March 2011. Support is at around 1540.

Normally if Gold is climbing, other commodities such as silver and platinum would follow as well. We can expect crazy rise of them.

Break down ? (2011-07-14 ICBC analysis)

HSI was well supported at around 21600 two days ago when it plunged over 3%, as I have mentioned in Monday's thread. Yesterday, the index bounced a bit but the strength seems weak.

After China raised its interest rate and bank reserve rate, almost all of the Chinese Bank stock prices slumped hardly. It is reasonable though. Today let's see one of the leading banks.

Daily chart of ICBC (1398.HK):


ICBC has been staying well above the red up-trend line until this week. We can see that it broke down the line two days ago. Break down pattern is yet to be confirmed, but it is quite likely that the stock price is under bearish trend.

The purple pitchfork is a short-term channel for the bank. After reaching the middle line, the price rose a bit yesterday. But in general, I think it will slump even further.

Resistance is undoubtedly the red up-trend line (around 5.75).

For the downside, the pitchfork acts as a tool restricting extremely high volatility drop (although the slope of this pitchfork itself is quite steep). Strong support will be at around 5.3 and 4.4. The latter one sounds too far away, but it isn't impossible given current poor investment atmosphere and concerns over debts (not only PIIGS, but also US).

Weak break by USD Index (2011-07-12 DXY analysis)

Due to Europe debt concern (this time Spain), EUR has plunged greatly. Relatively, US Dollar Index gained. Today we are going to investigate the chart of DXY.



Above is the daily chart of USD Index (.DXY). With the concerns yesterday, we could see that the index broke the green down-trend line (the upper one), but the break was so weak and its rise wasn't considered a break out.

This might be due to the purple pitchfork. DXY dropped below the fork in last June, and is currently testing the bottom line of the fork. This could be a resistance to DXY.

Also, RSI is reaching a very high level. The index has probably lost its momentum to go any further, and it should start slumping back below the upper green line.

The support level is at around 74.5, which is the lower green up-trend line. After that, we have to see whether the debt concern is that bad which leads to another big surge of DXY.

Start dropping? (2011-07-11 HSI analysis)

Last week's stock market was moving side-way within a certain trading range. China raised its interest rate and bank reserve rate again, leading to slump of banks from Mainland China. But the globe market in general was quite stable, so Hong Kong did not plunge hardly.

In this week, it looks like the index will turn its head downwards again. Let's see the charts.

Daily chart of HSI:


The longer red line is longer term trend line that has been resisting the index. HSI reached this line last week and was not able to break out.

As we can see, there is another shorter term trend line above. Therefore, even if HSI breaks the first red trend line, there will be another resistance waiting it. I am not optimistic on breaking.

Instead, I think it is time for drop. The consolidation last week somehow suggests topping of the index.

Huge volume on Wednesday was due to Temasek Holdings selling CCB and BOC, which further led to investors selling shares of banks from Mainland China.

Therefore, resistance is at 22800-23000. Strong support is found at below 21600.

Weekly chart of HSI:


Basically, weekly chart didn't tell more information than daily chart did. I have further drawn a pitchfork which confirms that there will be a strong resistance at around 23000.

MACD is turning its direction, suggesting that the bullish force has come to an end and hence the index lost its momentum to further surge.

The index is not expected to break out. It is more likely to fall again this coming week.

Important Economic Data this week (2011-07-10)

11-Jul (Monday)
China New Yuan Loans

12-Jul (Tuesday)
Bank of Japan Rate Decision {Forecast: Unchanged}
14:00 Germany CPI {Forecast: Slight drop}
16:30 UK CPI {Forecast: Unchanged}

13-Jul (Wednesday)
10:00 China Real GDP {Forecast: Slight drop}
16:30 UK Jobless Claims Change {Forecast: Drop}

14-Jul (Thursday)
02:00 US Minutes of FOMC Meeting
06:45 New Zealand GDP {Forecast: Slight drop}
17:00 Euro-Zone CPI {Forecast: Unchanged}
20:30 US Advance Retail Sales {Forecast: Slight increase}
20:30 US Retail Sales Less Autos

15-Jul (Friday)
20:30 US CPI {Forecast: Unchanged}
21:55 U. of Michigan Confidence {Forecast: Slight rise}

Time to jump? (2011-07-08 VIX analysis)

Above is the daily chart of Volatility Index (.VIX) which measures the implied volatility of S&P500 options.

The index currently drops to the strong support zone at around 14.3-15.3. This area is historically extremely strong and VIX is not expected to drop below it.

Both MACD and RSI are at low levels, suggesting that there is no other major factors stopping the boost of the index.

So the index should jump within few days. For the upside, the red down-trend line provides resistance to VIX at around 23.

After reaching the resistance, as suggested historically, VIX is more likely to slump back to the support zone, and wait until the jump next time.

Fibonacci and Trendline (2011-07-06 GBPUSD analysis)

Look like BYD didn't have enough power to break out. It is still under the short-term pitchfork. But I am still quite optimistic towards it.

4-Hour chart of GBP/USD:


We can see that sterling has been rising along the green up-trend line for a while, and was resisted by the orange down-trend line.

Gradually a flag shape has formed, and we could expect increased volatility. Interestingly, the bullish trend of the pounds ended at around 61.8% fibonacci level. It looks like this retracement has a certain influence.

Red line is the longer term down-trend resistance. Of course, there will be a strong selling force when GBP reaches the line.

Together with the estimate of fibonacci retracement, it is expected that pounds could reach around 1.625 after around 2 weeks, and will be blocked and turned its direction downwards again.

Whether it can break out depends on any economic data or breaking news at that time. We will have to wait then.

H-share led by A-share (2011-07-05 BYD analysis)

Above is the daily chart of BYD (1211.HK). A-share was listed few days ago and surged consecutively. H-share, as we could see, followed and rose as well.

Since late 2009, the price has been under bearish trend for such a long time, and dropped from over 87 in 2009 to as low as 21 in June 2011.

Due to the excellent performance of A-share (gained over 70% in three days), the price of BYD HK broke out and appeared to have ended its bearish trend.

However, there is another short-term resistance given by the orange pitchfork. This is expected to curb the sudden rise, for a while.

If the orange fork breaks, the price will reach the purple fork, which is at around 33. This is the final resistance, and if it breaks too, BYD could start another long-term bullish trend.

This China automobile company focuses on developing new-energy automobiles. Although they are still not that popular due to the inconvenience caused, in long-term this would become the trend of vehicles and BYD is of course a good company for long-term investment.

Charts tell the same thing (2011-07-04 HSI analysis)

Last week the world's stock markets were doing great. Most major indexes rose, including Hang Seng Index. This was mainly due to optimistic views on Greece debt problem and some positive economic figures.

Let's see how HSI will move this week.

Daily chart of HSI:


The trend lines are more or less the same as what I drew last week. I could not find better lines which can indicate further movements.

As we can see, HSI is currently in between the support and resistance (in green and red). After forming a bullish cross, MACD and its EMA are both heading upwards, we can expect a positive momentum which leads the index to higher levels.

23,000 is obviously a strong resistance to the index, the short-term and long-term down-trend lines meet there.

For the downside, 21,400 is the support level given by the green line.

Weekly chart of HSI:


The weekly chart looks very similar to the daily chart. Apart from the three lines I drew on daily chart, I added a pitchfork and two not-too-relevant purple up-trend lines too.

The difference is that the pitchfork suggests a resistance slightly higher than 23,000, at around 23,200. So if the index surges, we might see it going above 23,000.

Downside is still 21,400. The two charts tell the same story.

Important Economic Data this week (2011-07-03)

5-July (Tuesday)
12:30 Reserve Bank of Australia Rate Decision {Forecast: Unchanged}

6-July (Wednesday)
18:00 Germany Factory Orders {Forecast: Drop}

7-July (Thursday)
06:45 New Zealand GDP {Forecast: Slight Increase}
09:30 Australia Unemployment Rate {Forecast: Unchanged}
19:00 Bank of England Rate Decision {Forecast: Unchanged}
19:45 European Central Bank Rate Decision {Forecast: Increase}

8-July (Friday)
19:00 Canada Unemployment Rate {Forecast: Unchanged}