Thursday, August 11, 2011

Website changed (after 2011-08-14)

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http://jeffreyta.blogspot.com


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Thanks for all your support.

Safe heaven (2011-08-11 CHF analysis)



Above is the 4-hour chart of Swiss Franc (CHF). Starting from May 2010 when USDCHF was at 1.17, Franc has been strengthening.

The situation worsened in August 2011 as CHF rose even faster following the debt concerns in Europe. Investors were speculating on Franc.

We can see that USDCHF was falling along the purple Pitchfork for over a month. Yesterday, it finally broke the fork and USDCHF plunged lower.

On the 4-hour chart, Franc formed a small flag after great surges. The flag was probably a bearish flag on this USDCHF chart signaling another bearish wave coming.

I expect that there is still room for CHF to rise as the debt concerns in Europe and US are still not solved. Speculators would be seeking something "safe" such as Japanese Yen, Gold, Swiss Franc and so on. These would be keep on rising until the concerns are more or less eased.

Wednesday, August 10, 2011

Cement again (2011-08-10 TCC International Holdings Ltd.)

Finally Hang Seng Index dropped below 19,000 but later remained above this level. It seems like this level is pretty strong which the index could hardly break at this moment, and its time for some rebound.

Let's find some good stocks for short-term investment.



Above is the daily chart of TCC International Holdings Ltd. (1136.HK). The principal activities of the Group consist of the import and distribution of cement in Hong Kong, the manufacture and distribution of cement, clinker and slag powder in other areas of the People’s Republic of China. (from: http://aastocks.com)

To me, cement companies are currently worth investing ones. There are lots of constructions in both Hong Kong and PRC that require lots of cement.

Also, when the stock markets are fluctuating like that and possibilities of default in US and some EU countries, China has to devote more effort into building infrastructures in order to boost its competitiveness against US or Europe. Cement becomes one of the most critical materials.

Technically, the green line nicely supported the stock price, which plunged following the over-1000-point slump in Hang Seng Index.

Moreover, a big white candlestick was formed yesterday. This is a possibly trend reversal pattern which signals an end of the bearish movement.

4.80 is undoubtedly the first resistance, which resisted the stock price from going any higher yesterday. If TCC breaks above it, I would expect it reaching the previous high at 5.50.

In longer-term, this stock is a good stock. Current ratio and Quick ratio both turned into higher than 1.0 in 2010/12. Compared with lower than 1.0 in 2009, we can see that the company is trying hard to lower their liabilities and increase assets. Though long-term debt/equity and total debt/equity both rose, the amount is not very non-reasonable and if the company could make good use of these debts, they could make a good profit.

Tuesday, August 9, 2011

Take a rest now? (2011-08-09 VIX analysis)

Another crazy plunge in US markets yesterday night (over -5%), and HK market would probably follow again today dropping over 1,000 points. I expect the index reaching 19,000 support level which I mentioned yesterday.

Daily chart of Volatility Index (VIX):


Finally I had to zoom in the chart to over 3 years. With the sudden movements these few trading days, the volatility index jumped and reached the 2-year high at 48.

I believe its time for the stock markets to take some rest. Nevertheless, we can see that the only period when VIX surged over 50 was during Financial Crisis in 2008.

Although there are many bad news coming and coming now, there is no single trigger that could result in it; unless one of the few countries goes default.

Therefore, consolidation/slight rebound should happen for S&P500 tonight, perhaps after the big fall in HSI today.

And then when its time for another crisis, the VIX would be jumping high again.

Monday, August 8, 2011

Bearish view (2011-08-08 HSI analysis)

What a long time since we last saw Hang Seng Index plunge over 1,000 points. The strange thing for last Friday's incident was... there wasn't much bad news causing so. The raise in debt ceiling in US was even passed, and the stock markets just slumped. Europe and US markets dropped over 4% on Thursday and Asia markets followed on Friday.

S&P then downgraded US to AA+, and different parties carried various views on it. Buffet said US should get quadruple A but it was quite obvious that he was trying to calm investors down in order to maintain the stability of global stock markets.

OK let's get back to Hang Seng Index.

Daily chart of HSI:


Obviously, the candlestick on last Friday just broke all the short-term and medium-term support levels. There was a huge gap in between.

The index opened at 20939 and fell to as low as 20643. Finally, it rebounded and closed at 20946. An extremely long lower shadow was formed. The body of the candle was small too cause the open and close was almost the same. Therefore, we can treat it as a Doji.

With such a position and the previous black candlestick, this could possibly be a Morning star, signaling an end to the bearish trend and a start of bullish trend.

But this would depend on whether the candlestick today would be a white one or not. If so, it is a trend reversal pattern; otherwise, the bearish trend should continue.

Nevertheless, resistant level is at around 21,200, but this is not a very strong one. If HSI is going to fill the gap, it might stop at this level for a short while.

Weekly chart of HSI:


It looks clearer on weekly chart. I have been drawing the pitchfork for the past few weeks HSI analysis thread, and there is no doubt that the pitchfork does matter.

After HSI touched the upper line of fork, it slumped last week. Amazingly, it was then supported by the middle line of the fork.

Therefore, there should be some rebound at this point. Other than 21,200 shown on daily chart, the next one would be at 21,700, which is the 23.6% fibonacci level. This level has been doing well on supporting the index before, and now it would turn to resistant.

On the other hand, if HSI keeps on falling and breaking the middle line of pitchfork, it could reach 19,000. Another financial crisis would follow.

To be honest, I am not having an optimistic view. All the news we have now are bad ones. Countries in Europe and US itself are having problems repaying debts. For US, they are just delaying the time of default, no actions are done in regards to the decreasing ability to get revenue. Ultimately, they may need bail-out and its just a cycle. Once the bubble bursts, more than one countries would have to go default and markets will surely plunge hard. I'm not sure when this day would come, but to me, it seems like it will happen soon.

Sunday, August 7, 2011

Important Economic Data this week (2011-08-07)

8-Aug (Monday)
13:45 Switzerland Unemployment Rate {Forecast: Unchanged}

9-Aug (Tuesday)
10:00 China Consumer Price Index

10-Aug (Wednesday)
02:15 US FOMC rate Decision {Forecast: Unchanged}
07:50 Bank of Japan Meeting Minutes
14:00 Germany CPI {Forecast: Unchanged}
17:30 UK Inflation Report

11-Aug (Thursday)
09:30 Australia Unemployment Rate

12-Aug (Friday)
20:30 US Advance Retail Sales {Forecast: Increase}
21:55 US U. of Michigan Confidence

source: http://www.dailyfx.com

Friday, August 5, 2011

More on USD (2011-08-05 DXY analysis)

Last week's Monday (25-July) I wrote that HSI would experience a big drop and reach 21,000 last week. It seems like I had made that conclusion too early and given no time for the index to move as so. And today HSI is going to reach 21,000 following the 4% plunge in US markets and more than 3% slump in European markets and Japan markets currently.

Looking at the weekly chart, we can find a support at around 20,900 (fibonacci). If the index breaks this level, which means it has plunged through the middle line of fork as well, next strong support will be at around 19,500.



Above is the daily chart of US Dollar Index (DXY). I anticipated that the index would drop further because of the bearish flag.

However, Japanese and Swiss both acted against their strengthening currencies, which harmed their export trade. Therefore, we can see that the Japanese Yen and Switzerland Franc both weakened yesterday.

Indeed, most of the major currencies weakened against US Dollar, which may be one of the reasons behind the 4% slump in stock markets.

DXY was back into the large flag, and broke out the bearish flag I mentioned on Tuesday. 76 will be the next resistant level.

MACD and EMA crossed and gave a bullish signal. RSI is at quite a high level, so the index would probably consolidate for one or two days before starting another large rise.

General trend is still bearish, as the index is still under the red down-trend line. If it breaks out (76), then we can conclude that the whole trend has changed. Bullish Dollar Index would basically mean bearish stock markets too.

Good luck.

Thursday, August 4, 2011

Important cement (2011-08-04 China International Material Co. Ltd. analysis)

Following the possibly of downgrade on US by Moody, the global stock markets plunged hardly. Hang Seng Index was down almost 2% yesterday, reaching as low as 21882, which is the support level I mentioned on Monday's thread. There should be a little rebound, but the general trend is still bearish.

Among some big companies, I was trying to find out any worth-buying stocks. Given such poor investing environment, most of the large-capital stocks are more likely to follow the market to slump.



Above is the daily chart of China National Materials Co. Ltd. (1893.HK). The Group is principally engaged in provision of cement equipment and engineering services, production and sales of cement and other high-tech materials. (source: http://aastocks.com)

The stock price has been under the bearish trend since April, and was moving to lower levels slowly.

Due to the sudden drop of global markets, the stock price followed and a long black candle was resulted.

The red line represents the resistant and green line is the support. Purple lines are the pitchfork lines.

As we can see, the price just reached the middle line of the fork. Therefore, we can expect a little rebound here.

If the stock price breaks down, the next support will be at around 4.05, which is an extremely large drop representing around 20% slump. Nevertheless, given these few days' situation, such plunges are not surprising.

The upside target is at around 5.50, then the price would be more likely to stop rising and turn to downward in short-term.

However, in long term, this company quite worth investing. Cement is a crucial materials used in construction sites, and usually in last three to four months of a year, there will be lots of construction sites in China hoping to use up the funding by Government; therefore, this company would probably get good profits later.

If it really reaches 4.05, then we can consider buying this as a longer-term investment. But what we have to keep aware of now is that when the price drops below 5, we can sell and wait until 4.05 and buy again.

Tuesday, August 2, 2011

Bearish flagsss (2011-08-02 DXY analysis)

The House just approved raising US debt limit by at least $2.1 trillion. Default date therefore was delayed, and corporate investors made good use of this news to narrow the plunge of US markets yesterday.

However, I do not think this has a long-lasting effect. In fact, after HSI reached 22,800 yesterday and showed a false breakout, we can expect the index to drop in remaining of this week. Around 22,150 is the next support.

So today let's see how the increased debt limit could possibly affect the US Dollar.



Above is the daily chart of US Dollar Index (DXY). The index broke down the red flag two weeks before, and the overall trend has turned to even more bearish.

Indeed, the red flag could be treated as a bearish flag when we look at the big picture. At first, US Dollar slid along the orange down-trend channel. Then a bearish flag appeared and told us that the trend would continue.

After looking at the big picture, we can try to investigate some smaller waves. The purple flag is possibly another bearish flag, following the bearish movement in July 2011.

The index beautifully moved along this purple channel. If it breaks down, then another big downward wave should show up. Therefore, Euros, Pounds, Yen so on and so forth are anticipated to strengthen.

On other hand, if DXY breaks out instead, the lower red line will be the resistant. The level is currently at around 15, but it will be increasing.

Personally I carry a more bearish view on DXY. While USD is depreciating, HKD is following as well. We will be having a hard time to convert the currencies for traveling or trips...

Monday, August 1, 2011

Bearish Trend (2011-08-01 HSI analysis)

Last week I expected that the Hang Seng Index plunged due to poor economic data; however, the data seemed to be surprisingly good (except US GDP whose effect on HSI had faded out after the weekend).

0621.HK which I wrote on Wednesday slumped over 20% on Friday and NZD unexpectedly went upwards after my thread about it (which I anticipated a drop) on Friday. Seems like my analysis is all wrong. Too bad...

Anyway, let's learn from failure. And check out charts of HSI.

Daily chart of HSI:


The red and green solid lines are what were drawn on last week's chart as well. We can see that the index broke the green solid line, which is the short-term down-trend line, last week.

After breaking this, HSI faced another strong resistant, which was the red down-trend line. Therefore, it seemed to be unable to go any higher, and started to consolidate.

This week, my view is non-bullish again. Red line will be the resistant (which is at around 22,500-22,650).

For the downside, the green line gives support at around 22,200, which gradually becomes as low as 22,050 five days later.

Weekly chart of HSI:


Seeing the picture, we can recognize the bearish trend of Hang Seng Index. The pitchfork is the main indicator for such trend.

Last week the index reached the upper line of the pitchfork, and was resisted and then retreated.

This week it should be falling. The 10-day SMA gives some support to the index. If HSI breaks the SMA, it is more likely to drop quite a lot.

23.6% fibonacci level is the first support (on the big picture). The index is expected to rebound at around 21,900.

Strong support will be found at the middle line of pitchfork. But the index is less likely to reach this level this week.

To conclude, this week we have to be extremely aware of any rebound at 22,200. If it breaks the green line on daily chart, then the index will drop to 21,900.