It has been a while since my last post. I guess I wanted the full impact of what I was trying to highlight filter through. Since then, we have seen a 7% rally in the S&P and a 10% rally in the DAX (the heart of the crisis): http://swingtradersedge.blogspot.com/2011/09/intermeadiate-low-is-in.html. However, Asia has not followed the script and has languished. It seems clear to me that Asia is waiting upon a major catalyst from overseas whether it is the Europeans sorting out their mess or Ben piling more dollars into the markets. Whatever it is, Asia is poised for a very strong rally I believe and we just have to be patient. I also continue to believe that the S&P and the DAX have higher to run. There is still a lot of bearishness around and yet the markets are clearly catching a bid despite the negative headlines. I am still yet to see a technician calling this market higher- the overwhelming consensus is that this is a bear flag/4th wave. Perhaps I am missing something, but my experiences tell me that the market has a habit of doing what everyone least expects. Bears will not be able to hold on for too much longer.
A quick run through of key Asian markets:
Hang Seng Daily:
This looks to be a great double bottom pattern to me. Clearly there has been a lot of volatility around this level and offers a clear low risk entry for the bulls. There is a good bullish divergence in the momentum indicators vs the underlying price action. Momentum precedes price.
Hang Seng Daily ii
Note that the market has hit a key pivot level. Once again, a great low risk long entry with the correct stops.
Price has traded right into support and the low end of the range. We have seen a breakout from a ending diagonal pattern with bullish divergences. The Japanese government is actively buying stock indicies/efts. Want to be short here? Don't be.
We have seen a strong thrust off the lows and a overlapping corrective pattern right into the 61.8 fib retracement at 4000. This is a great level for a higher low to form. A number of underlying stocks are at great support levels. Bottom line, I am looking for a breakout in the coming days targeting 4500.
A perfect A=C on the low. A perfect failed breakdown. A great base pattern forming under res. Looking for breakout.
This pattern played out perfectly. Bigger picture, this still has higher to go up to the levels cited.
In sum, the market is awaiting what Ben can pull out of a hat. There is so much bearishness around that any big shift in policy will cause a monumental squeeze. The underlying price patterns and tape are indicating that there is genuine potential for a breakout. I will be reducing the book into the announcement but I have a bullish expectation of the outcome.