Thursday, November 13, 2008

Market Trend: A Whole New Cycle Ahead...

An explosive fireworks finale to mark the end of the cycle which ended yesterday, November 12th... We hit a low of 801 on Oct 28th and that subsequently, triggered off an explosive display of strength. Composite Index hit a high of 926/7 level on Nov 5th and has since mellowed southbound with dwindling volume.
What this new cycle is going to bring us remains everybody guess..
After applying the cycle approach and knowing that we are into a new cycle starting today, we may now take a look at the all the factors and parameters available. This would involves piecing work like trying to piece a jigsaw together.
From the recent market movement, we can see that it was quite a broad base movement. One interesting sign that needs further behaviour studies. Was there a round of sweeping up undervalued stocks? Or was it a just a short play up to distribute whatever position 'they' took during the heavy margin force selling earlier? Only further observation can tell with time. 'They' refers to the hands behind this movement.
And from other parts of the world, Dow is trading at near its critical level now. A breach at this level would see a new low for Dow indices. Real economy is of no help either. Indicators continue to show major slowdown with threat of increasing unemployment. Europe? Like I have said way earlier, Europe is going to bear the biggest blunt of this subprime bubble. Simply because they were at the receiving end at the subprime peak.
Back to the local front, my immediate take is that we may have to go through another cycle of consolidation with more downside. Since volume has fizzled off quite substantially, there will be selective manipulation of certain stocks. Be wary and don't get trap into their distribution game. Critical support stands at 832/33 level. Critical in the sense that a breach would triggers off a 'hell breaks loose' market meaning that a low in the Composite Index would be set.
A conservative approach is to stay on the sideline for more concrete signs. Don't be fooled by the recent fireworks finale. Trade the futures. Short on strength for the time being.
Until the next update, good luck!

No comments: