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.