Analyst Reports 23: Eastern Markets vs Western Markets?

By Paul on May 19th, 2009

: Image by babblingdweeb via Flickr

I think it goes without saying that the Indian Stock Market stunned everyone to death today. 17% up in one day is amazing compared to STI’s gains over the last few weeks. I wonder whether a total market halt was triggered cos when it did a more than 10% fall Jan last year, this was what happened. Extreme xia.

Upon seeing how the markets have gone up quite a bit recently made me take a step back to assess my investment strategy from here. My philosophy is this – practice stop-loss in a bear market and let profits run in a bull. The reason why I have been charting so much for the past year is because trading seems to make the most sense in a falling market (you buy at a lower lower and sell at a higher low). But it seems that a lot of markets have been running up so well..

Is it time for a bull market?

I did some long range charting for the markets I am tracking most of the time. To me, it’s EAST versus the WEST when I see all the charts as a big picture. Here’s what I have deduced:

India SENSEX 30

Let’s start with the most exciting one first. Today’s rally brought the index about the 12400 resistance to the 14700 resistance level. The first hint for those who intend to go long long term is when it cleared the 10000 level at start april because that was when it broke above the long term downtrend line. The signal that a bull might be in place is when it crossed the 200MA line in mid april, a July07 resistance at about 11000. Well, the elections is a trigger for such a rally. Not too sure whether the momentum will make it thrust higher as I don’t have a volume indicator. Next levels to take out will be 14700 and then 15800 regions. Those who are interested in this market can still take advantage of any pullbacks with 200MA as support.

Dow Jones – US

200MA not crossed and still way under the long term downtrend line. Well, I’m not interested in this market but only the fact that it influences the rest of the world to a large extent in a short time frame.

FTSE Europe

It faces a strong resistance at the 4660 level and is current struggling with the 200MA line. It is still way under long term downtrend line. Weekly chart shows some promise in uptrend strength.

Hang Seng

Broken above 200MA in end April. This also nearly coincides with the break above the 16000 region resistance as well. Weekly as well as daily chart shows gradual uptrend in MACD.

Nikkei Japan

It just nicely hit 9600 region resistance and long term downtrend line start May. Much depends on whether it can breakout above these 2 resistance without going down the triangle formation supported by a nice 45 degree short term uptrend.

SSE – China

Crossed 200MA in mid march and silently broke above the long term downtrend line in start May. It is still currently moving in an uptrend band that began in Oct 2008. It is good to know that it surpassed its strong resistance at around 2550 level.

STI – Singapore

To many, STI marks a lot of hope for most in the recent weeks. Good news is that it has cut above the 200MA line, an almost sure sign of bullishness. However, it has just hit the long term downtrend line and turned down a couple of days back. This 2280 region also marks a resistance set in Jun 2006. Look to the 200MA line for support.

By charting all the above and writing it down, it is a lot clearer on which markets are “more promising”. I’m ranking them below in terms of preference:

SSE China – Nice gradual uptrend and 3 signals passed
Hang Seng
STI
BENSEX – better if it pull back a little
FTSE
Nikkei
DOW

You see the difference between the East and West?

Looks like I would be switching into my China Funds again. By doing so, i missed out on about 10% gain from my last switch because I wanted to catch a low after a bounce off the resistance and still under the long term downtrend line. No regrets because it’s a trading risk I took to lose less money. Most likely, I will stay onto this unless SSE suddenly turns down badly.

Once the bull markets starts coming in (for me, it is the 200MA breach), it’s more of doing RSP to ride the waves up and looking into great value stocks that have not climbed as much. Slowly now, I’ll be turning more to fundamental investing.

Hope the above blog post was helpful. If it is, do leave your comments or link back to my this post. Would love to hear them or visit other blogs after spending 1 hour plus typing all these down.

Success to all!

‘The market is as cheap as in 1953′ (telegraph.co.uk)
Bear trap rally or new bull? (dailyfinance.com)
Is The Bull Market Back? (usnews.com)

One Response to “Analyst Reports 23: Eastern Markets vs Western Markets?”

Investment Commentary from my Financial Advisor
20 May 2009 at 6:01 am | Permalink

[...] a while, I am relieved that my deduction in my last post is sorta in line with my financial advisor for the view of China. The talk on STI is a little scary [...]

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