STI since hitting 2,700 on 4th Aug 09 has retreated to its first level of support at around 2,520 last week. Short-term wise, if the support at 2,520 is able to hold, there will be a technical rebound. From the chart, the short-term GMMA set of lines ( blue coloured ) is being compressed while the long-term GMMA lines ( brown coloured ) still pointing to an uptrend and this could signal a change in trend. The change in trend should be bias towards the upside following the trend of long-term GMMA. This change in trend if couples with high volume could potentially re-test the 2,700 resistance and might even breakthrough of it and heading to a target of around the 2,850 to 2,900 level; a previous suppport level in Jul 08 before the market crash to March 09 low. If the rebound failed with 2,520 failing to provide the support, the next level of support will be around the 2,230 level; the support level in Jun and Jul 09. As a whole from the GMMA indicators, STI is bias towards the upside than the downside at the moment.
HSI also fell for the week but from the chart, it has yet to drop to its first level of support around the 19,200 level. The short-term GMMA lines are being compressed indicating a potential change of trend is in the making. The long-term GMMA lines still maintain an up trend. Hence, a change in trend would bias towards the upside. The possible target on the upside would be the 22,500 level which it tried to break in Jul 08 period. A concern for HSI is it did not drop to the support at 19,200 for this round of correction and hence can't see how strong the support was and also HSI is very coupled with SSE and if SSE failed in its rebound, the upside for HSI might be capped or even subject to move down to test its support level.
SSE is in a very worrying state among the global indexes. It has risen since Oct 08 to hit a high of 3,455 on 4th Aug 09. It has also dropped almost 20% from its 3,455 high last week before a rebound to reclaim some 4% to 5% footing. In term of GMMA indicators, the picture is not rosy. The long-term GMMA lines starting to bending down indicating long term investors are start selling stocks and if that couldn't rebound and go into compression mode, SSE will be seeing more downside to come, potentially hitting the support near the 2,400 level. Short-term GMMA lines still no show signal of a strong rebound in place. Economists are forecasting China 3Q GDP to be 8.5% and couple with 1Q 6.1%, 2Q 7.9%, China need 9.5% in 4Q to maintain a 8% growth for the year. This 8% growth is required to maintain and sustain its unemployment rate. This should be some factor need to monitor closely as global economy at the present is looking towards China to lead the recovery. If China itself can't do it domestically, it will be a tall order to lead the rest of the world out. Cautious has to be exercised for SSE at the moment as its index is showing a bias towards downside more than upside as compared with other indexes around the world.
DJI has been on an uptrend since Jul 09 when both the short-term and long-term GMMA lines expanded out during that period. This could be a very powerful rally in the making with first resistance to test is the 9,650 level and if that breaks, potentially will be 10,400 level next. Even the ADX signals are pointing to an uptrend when the DI+ diverges from the DI- and with the ADX line around the 40 level indicating the strength in strong in current trend. If Asia markets chose to follow DJI rather than SSE more, potentially Asia markets will see more upside in the short-term.
For short-term traders, markets in general less SSE are bias towards the upside and that could be an opportunity with a possible time frame from now till mid Sept before the market might start to consolidate prior to the next earning seasons in Oct. For long-term investors, might consider slowly accumulate when market undergoes a dip. Economists and global leaders are saying worst is over but recovery will be slow and patchy and hence there will be times when market valuation overstretched and need to correct down for valuation adjustment and that would be the time for long-term investors to look into the market. If 3Q corporate earnings in Oct continue to see improvement, stock prices will suggest to further upgrade from analysts and whatever prices at current level would be consider a relatively good first entry price level. Do keep this option opens. Strategy for long-term investors who do not want to miss the boat and afraid of getting in the stocks at the wrong end of the price level, is do dollar cost averaging whenever there is a moderate amount of dip in the market. Set a few level of entry price levels and slowly collect. If we are looking at global economy recovery on the way, stock prices will be behaving in such a trend that March low level is lower than Jul level and Jul level will be lower than Sept/Oct level.
