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.
Nikkei Daily:
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.
Australia Daily:
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.
Nifty Daily:
A perfect A=C on the low. A perfect failed breakdown. A great base pattern forming under res. Looking for breakout.
DAX Daily:
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.
Thanks
Austin
