Nasdaq closed 1,535.57 for the week ended 28th Nov 08, up 151.22 points or 10.92% from previous week.
S&P500 closed 896.24 for the week ended 28th Nov 08, up 96.21 points or 12.03% from previous week.
Crude oil price finished the week at US$56.41/barrel as compared with previous week of US$51.25/barrel.
STI closed 1,732.57 for the week ended 28th Nov 08, up 70.47 points or 4.24% from previous week.
Global markets were on a rally mode for the week with news of US Government bailout of Citigroup, China slashed interest rate by 108 basis points, the traditionally Thanksgiving day rally and perhaps a window dressing by funds due to end of the month despite bad economic data, problem in Thailand and India. STI was however faced with a selling pressure from the Offshore/Marine stocks after KepCorp announced of cancellation of contracts and analysts downgrading them after that, which restricted a strong rally from other counters.
A recap of last week US economic data/event is as followed.
- 24th Nov 08, Existing Home Sales reported 4.98M, consensus 5.00M, previous value 5.18M.
- 25th Nov 08, 3Q08 GDP came in -0.5%, consensus -0.5%, previous -0.3%.
- 25th Nov 08, Consumer Confidence reported 44.9, consensus 38.0, previous value 38.0.
- 26th Nov 08, Durable Goods Orders came in -6.2%, consensus -2.6%, previous value 0.8%.
- 26th Nov 08, Personal Income reported 0.3%, consensus 0.1%, previous value 0.2%. Consumer Spending reported -1.0%, consensus -0.9%, previous value -0.3%.
- 26th Nov 08, Jobless Claims came in 529K, consensus 537K, previous value 542K.
- 26th Nov 08, Consumer Sentiment reported 55.3, consensus 57.9, previous value 57.9.
- 26th Nov 08, New Home Sales came in 433K, consensus 450K, previous value 464K.
- 1st Dec 08, ISM Mfg Index, Construction Spending
- 3rd Dec 08, Productivity and Costs, ISM Non-Mfg Index
- 4th Dec 08, BOE and ECB announcement, Jobless Claims
- 5th Dec 08, Employment Situation
Technically, DJI, Nasdaq and S&P500 long term trend are still down, short-term on the other hand is an up trend but based on past reference and mixture of indicators, the current short-term uptrend might be capping soon. In the ADX chart, DI pair is still negatively placed eventhough DI- is moving down and DI+ is moving up to try to do a crossover. Previously, when DJI rallied up for the US Presidential election, the DI pair also almost crossoever but failed to do so. Potentially, same case might happen again. MACD signals still in convergence mode and MACD histogram still in the positive region. Based on these positive signs, upside is there but the MACD signals still in the negative region hence limiting any upside. Stochastic signals are moving up towards the 80% level but RSI on the other hand unable to breakout from the 50% level despite a rally for past 4 days, this might indicate the rally is hitting a road block soon. Looking at the trend line for DJI, Nasdaq and S&P500, all 3 of them are doing a lower-low and lower-high formation. This in general is not bullish in nature and they are now around the resistance line of the channel. Unless a breakout from the channel occurs if not might see some pull back soon.
Technically, STI long term trend is still down but short-term trend is an up. Since rebound from 1,570 level, STI sort of doing a double-bottom formation and for the time being if a double-top formation is going to form, the resistance level will be at around the 1,930 level. In the ADX chart, condition has improved as the DI pair is trying to crossover. MACD signals still in convergence mode and its histogram has risen in the positive region but a caution is that MACD signals still reside in the negative region hence possibility of capping any upside to the double-top level. Stochastic signal is moving towards the 50% level and if past reference that 80% level is a resistance, it still has more room to move up. A little downside is the RSI signal which is still relatively weak as it has not managed to move up towards the 50% despite the recent rally instead it stays flat just above the 30% level. Unless STI is able to breakout from the 1,930 level and break the long term downtrend else it will pull back after hitting the 1,930 level to complete the double-top formation.
From the TA perspective of US markets, unless the lower-low and lower-high trend is broken else US markets could be facing a pull back soon. With global equity markets are coupled, any pull back in the US markets will eventually cause the rest of the markets to follow too despite the fact that STI looks more upside in near-term. For the coming week, US has a couple of important economic data releasing like the employment situation and also on 2nd Dec 08, the CEOs of the 3 automarkers will be presenting to the US Congress how they would use the bailout if granted to save the business. Last week, despite some poor economic data, US markets seem resilience and able to absorb all the bad news and rally the markets but the chart is showing a different picture hence cautious should be maintained as the ailing economy globally has not changed overnight and to bottom out from that will take some times.
For short-term investors/traders, trend line trading might be the one that could achieve a good rewards to risk ratio. That is buy at support level, sell or short at resistance level. However, if the trendline is broken ie breakout from resistance or breakdown from support level, cut-loss should apply.
For long-term investors with at least 5 years investment time frame, should be looking from fundamental point of view of a counter and decide on various entry prices to slowly collect, spread out the purchase and that could minimize the downside risk quite an amount.
