Dow Jones, Nikkei and Hang Seng Up-date 13th Nov 2022

I was quite distracted recently on events surrounding me. First was my on's GCE 'O' Level examination which only completed this week, followed by my curiosity into the tech companies namely those we used to known as dot com companies, and lately Malaysia General Election GE15 or PRU15 in Malaysia. My foccus this week is in fact the election progress. 

Even though I have only lied in Malaysia for 12 years while the rest of my life remained oversea. I still hold some attachment to the country I was born and on considered me as Pendatang and second-class citizen. Probably there is this part in me to hope Malaysia will one day change for the better. 

Seeing recent deterioration further disappoint my expectation. Most political parties have close to nothing to show and they adopt the tactic of 'he is worse than me' in hope to get elected. People are pitched to go against one another in the most partisan and racist manner. 

Words like traitor, corrupt, incompetence, religious extremist are used to downgrade their opponents for their own leverage. I cna't imagine what would happen when these people hold office for the next 5 years. my hope is for none of these parties to be able to carry a majority, forcing them to work for the people.

I did have up-dates on specific counters such as dow Jones when it seemingly turned in  Is Dow Jones reversing again? (23rd Oct 2022), and Nikkei in Let's do a Nikkei 225 up-date (29th Oct 2022), The last up-date on Hang Seng was in Dow Jones, Nikkei and Hang Seng Up-date 24th Sept 2022. I believe I need to check on this guy, for the last 2 weeks, it has been rising.

But before I move on, I would just like to share this picture.

Fig 1. Dow Jones, Nikkei and Hang Seng on a single screen

When I put the 3 charts side by side, I can't help but to notice that it looks like the move of a single counter. Can it be some form of prophecy as o what to expect in the future?

Meanwhile let's move on.

Fig 2. Dow Jones Weekly Chart

In my last entry on Dow Jones, I predicted its 55-week moving average would be the next test point with resistance between 32,159 and 32,430. Dow Jones crossed this point the week before last and closed above the moving average by the end of the week. It moved on higher last week. It is also interesting to note at this pont that the MACD has crossed the neutral line, providing more confidence of further move in the same direction.

What follows is less complex. The present trend is up, using projection measurement, I can derive its resistance between 34,452 and 36,138.

However, a more crucial resistance at this moment is the previous high at 34,281, coincidentally the bottom of the upper Bollinger envelop descent. It will not be much of an issue if enough momentum is gained. Otherwise, there is a possibility of short congestion.

One might ask: The Fed has just increased interest rate by 0.75 to further reduce cash flow, why the market continue to rise at this point? The answer is 'anticipation'.

The market is always about the future, increase interest means price is still going to rise, and pushes the index upward. It is the announcement of halt to interest increment that market begin to fall.

Fig 3. Nikkei Weekly Chart

I have in the past more positive on Nikkei than the other 2 counters. Lately however, I feel that Nikkei has yet to complete is down trend.

In my last entry, I have more downside readings than up, with multiple support level between 21,874 to 25,444, while resistance at Bollinger envelop of 29,062.

While Nikkei rised last week due to influence of US interest rate and Dow Jones, its behavior is different, I do not see momentum prior to this ascension and closing 2 weeks ago remained below the 55-week moving average. the general pattern still remains as side trend.

Its present resistance from the Bollinger envelop has dropped slightly to 29,061. in addition, I will add another resistance which is the previous high at 29,222.

Fig 4. HSI Weekly Chart

HSI is te only chart that I did not up-date for a long time. It has maintained its down trend diligently until 2 weeks ago a bar turned green closing above the close of previous week. It maintained in that direction with similar force last week. Does it mean that HSI has also reversed?

I am still skeptical if it is a reversal. While China has shown sign of relaxing the pandemic control. There was no action from them on salvaging the deterioration of China's economy. 

The Hong Kong government is more anxious as they are sensing the danger of Hong Kong collapse. However, no oe dare to overwrite their boss from the north initiating full reopening of the city, let alone setting up stimulus policies to reinitiate the economy.

With 50 -60% of Hong Kong's stock market portfolio with companies of China origin. It is an up-hill battle for HSI to reverse.

On the technical side, Hang Seng has reached 2 different milestones, meeting the objective of both a major and minor zig zags at both 18,838 and 14,753. I have anticipated a few times in the past of a correction, and it did not happen. I believe it is doing so now.

I am still seeing strong pressure from the moving averages downward even with this spike, further indicating that the down trend is not yet over. 

I believe that it will retrace back to the 55-week moving average or higher before it perform one more leg down.

There is a much larger set up forming a double top with measurement reaching as low as 8,794 using expansion. For the time being it will be better to just focus on what we might expect in the near future. The level that low might be more long term.