US stock Market: Exceptionally Bearish

This week we bring you a simple update on US markets.


Weekly Dow Chart

The dominant feature of the DOW is the head and shoulder pattern and the neckline. The lower levels of the head and shoulder pattern have been achieved. Now the DOW is using the slope of the neckline as a resistance level. This is exceptionally bearish. The next historical support is at 10000. This has been broken, but we need to see a weekly close below this level before we can say support has failed. Support below this level is at 9300. Resistance for any rebound is provided first by the sloping neckline and then by the long term up sloping trend line.


Weekly S&P500 Chart

The dominant feature on the S&P 500 is the rounding top. The pattern target hangs in mid air near 1190. The nearest lower support level at 1160 has proved ineffective. The long term support target is near 1060. This has been broken, but we need to see a weekly close below this level before we can say support has failed. The next support level is near 960. The key feature is the ability of any rebound to move above the downtrend line.



Weekly NASDAQ Chart

The NASDAQ is a real concern because it has provided leadership for the US market. Both the S&P and DOW have followed developments in the NASDAQ. The NASDAQ achieved the head and shoulder targets in March. The fall below 2200 has not been arrested by support at 2020. This is particularly bearish. It suggests that further falls are possible, with a long term support level near 1850. This has been broken, but we need to see a weekly close below this level before we can say support has failed. Next support level is 1320. NASDAQ leadership confirms the lower targets for both the S&P and DOW.

To read more articles and commentaries from Daryl Guppy, click HERE

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Article contributed by Private Trader, Market Expert, Trading Coach and Best-Selling Author Mr. Daryl Guppy. For more articles and commentaries from Daryl Guppy, click HERE.

Falling Sun in the Land of the Rising Sun

The Japanese stock market got hit really bad because of the financial crisis that is currently haunting the US. Being one of the biggest trading partner with US, the Japanese crisis actually started a a few months earlier. Whole most markets started to fall in Octber 2007, the Japan market starts to fall in July last year. So, it was Japan that starts the domino effect of the financial crisis.

Just about a year ago, the Japan benchmark index, the Nikkei 225 was twice the current level. The Nikkei 225 closed at 10,155.90 points, after breaking the 10,500 points technical support level a day earlier. The benchmark index just cruised through the support level. How low can the Nikkei225 go?

Technically, the Nikkei225 broke all possible support level from the bull trend that started from year 2003 when the index was about 7,500 points. The bears have basically slaughtered the bulls which have dominated for about 4 years in 1 year! The trend is extremely bearish as the short term 30-day moving average is currently at 11,900 points. This means that the index is currently 14.6% below the average and this is very oversold. A technical rebound is expected at the next safety net (support level)

The next possible technical safety net would be 8,800 points based on a cluster of Fibonacci expansions from the October 2007 to March 2008 down trend. Resistance is at 11,600 points.


Daily Nikkei225 chart as at 7 October 2008 using NextView Advisor

Commentary and Analysis by Benny Lee

Singapore STI approaches the 2105 level

The STI is in its fifth consecutive month of decline, having fallen by more than 1,000 points since May this year. Earlier expectations of a short term rebound in the STI failed to materialize as skittish investors turned their attention to the potential economic fallout of the global financial crisis. While we are maintaining our long term bearish stance, we are keeping an open view that a rebound may still occur as the STI approaches the 2105 level - the objective of the measured move from 3906 to 2745.

Our prognosis for the long-term downtrend is predicated on concerns that 4-5% official GDP growth forecast is no longer realistic and that the Singapore economy may even dip into a technical recession as early as 3Q08. This is reinforced by the monthly NODX growth figures, which has been deteriorating since May 08. Although the inflation may have peaked, this could be a reflection of a weakening demand rather than an easing of cost pressures. This is likely to hurt corporate earnings in 2H08 and 2009, putting current market valuations at risk of further downgrades.

Going forward, markets will be on the lookout for continued volatility in credit spreads and banking/corporate failures in the US or Europe. Until the credit markets show signs of stability, the credit crunch is unlikely to end anytime soon. Given these uncertainties, we are recommending traders to take short positions on the local banks as we anticipate earnings to be adversely impacted by prospects of slower loans growth, fee-based income and higher loans provisioning.

Ken Tai Chee Ming, CMT Technical Strategist KELIVE RESEARCH Part of the Kim Eng Group

Stock markets support level - where are they?

The fact that central banks started to show concern and provide financial assistance to major financial institutions show that there is a great concern to the financial industry and a worsening economy especially in the US. Market indices has started to make new lows and breaking many immediate support levels.

On September 18, I have established some support level for the stock market indices and looks like the markets are nearing these levels. There still some room to move downwards for some markets.

Kuala Lumpur Composite Index 140 points (14%) above support level
Close: 997.23 Low: 980.28
Support level: 850 to 900

Singapore Straits Times Index rebounded on support level
Close: 2,177.55 Low: 2,128.96
Support level: 2,100

Hong Kong Hang Seng Index 1,800 points (10.7%) above support level
Close: 16,803.78 Low 16,790.86
Support level: 15,000

Japan Nikkei 225 broke below support level
Close: 10,155.90 Low: 9,916.21
Support level: 10,500
I will comment on the Japanese market tomorrow.

Thailand SET Index 40 points (7.5%) from support level
Close: 528.71 Low: 527.70
Support level: 480 to 500

US Dow Jones Industrial Average Rebounded from Support Level
Close: 9955.50 Low: 9525.32
Support level: 9,600 - 9,700

Commentary and analysis by Benny Lee

Almost a nightmare in Wallstreet, Commodities prices plunge

The price fall domino effect in Asia continued in Europe with France CAC40 index closed 9% lower and London's FTSE closed 7.8% lower. In the US, the benchmark Dow Jones Industrial Average falls 3.8% to closed under the psychological 10,000 points at 9,955.50 a level not seen since 2004. There was a high selling pressure in the earlier trading session as the DJI went to as low as 9525.32 points before climbing back about 400 points in the afternoon. It was almost a nightmare.

The US$700 billion bailout plan seems not able to create enough confidence for investors who fear of the inevitable recession. Even prices of commodities plunged yesterday. Crude oil falls below US$90 per barrel. Price of Light Crude futures November delivery closes at US$88.65 per barrel. Price of Crude Palm Oil in Malaysia went below its 10% limit down intraday but managed to climb back a little higher to close 9% lower from the previous day's low. The price of Crude Palm Oil futures december delivery closed below RM2,000 per metric ton at RM1,820. Price of Soybeans fell about 7% in the Chicago Board of Trade.

N.I.N.E.

Markets come a crashing

Thailand leading the pack in the Asian region by plunging 6.4% in a single day today. Singapore and Malaysia fell 5.6% and 2% respectively.

Markets are still heading downwards...


Index Quotes as at 6.00pm 6th October 2008 from NextVIEW Advisor