Hangseng 42-- New Weekly Moocano Watch on 28th May 2009

Hangseng 42

Yearly

Price chart: this one has gone over a key pivotal point at 17691. Hong Kong is definitely the leader of all global stock markets at the moment, it has the benefit of both worlds, western and Chinese and it is supported by both sides as well for economic reasons on one side and political reason on the other. It just seems that the bulls there are on Superbull drinks, even the billionaire Mr Li's warning did not make the bulls jitter at all. The next resistance point is near 24658, surely, that is a very tall order only for the Honker bulls.

Quarterly

Price Chart: hindsight is a beautiful thing to have and we can now draw a perfect downstream moo river there, encompassing all the actions up to the first quarter 2009 and with this quarter's candle standing right on top of the upperbank, how proud and beautiful for the bulls. We have gone beyond all bulls' imagination and up to all bears' resistance, this feels almost on the verge of moocanic eruption as well. Beyond 18000, sky is the limit. I think I used this phrase a few times on the old HQ at the beginning of this bull rally and now look where the sky is! If you are a bear, don't short Hong Kong as well as Japan, while the evidence for Japan is still not there, but Hong Kong could really go parabolic, as I recall 2009 is the full year where a lot of Chinese wealth money can be poured into the Hong Kong stock market freely. This could be a bubble of a magnitude that few bears can average up and survive, be warned and be very careful there if you are a bear there. Draw the five waves down in the downstream moo river and think the following:

a. Wave 4 is just Wave 1 in a 5 wave impulsive waves up;
b. Wave 5 is Wave 2 and we have gone past that;
c. We are in Wave 3 and look back at the Wave 3 down last year, it was a massive 16185 pointer! if this current Wave 3 is of similar magnitude, it will burn a lot of averaging up bears to their last hair! Think again, if you actually afford to do that!

Monthly

Price Chart: we are definitely in a powerful upstream moo river at a very healthy rising angle of +45 degrees. For some reason, we are keeping it really steady and quiet along the lowerbank at the moment. While the outlook given in Quarterly is for a V shaped rally back up to where we came down from last year, we could also work out a less bullish scenario for a top near 20700ish (I am astounded, as this is a number supplied by one of my best mates on the III forum in the name of Toastmaster General--TG as I call him, a few months back, well before this rally took any sort of shape or form). So sky might have a limit after all. If that is the case, June is the month for it, it seems.

RSI: take a look of that, you could see five waves down followed by a W shaped rally up. It is a beauty if you are a bull.

Other momentum indicators are all bullish and exhibit no signs of tiring or bearishness yet, shocking!

Weekly

Price Chart: while 18221 might be a pivotal resistance level, really there is nothing to stop this one to go straight to 20700 and why would it stop there, I will double check with TG again. For me to come to this figure amongst the moo rivers and my simpllistic EWT waves is simply shocking.

RSI: this is the first place that I see justification for a major pullback, once we have hit the upperbank in this healthy looking upstream moo river. Watch out for an oddly shaped M against the upperbank, for bulls to take profit at the right top of this wave of rally.

Momentum: we have penetrated one giant triangle there, and have a study of the triangle theory, I think it needs to seek an equilibrium somewhere in terms of another triangle. For my reckoning, we have hit the upperbank there now, but remember price tends to lag momentum, so price might still rise on bearish momentum divergence, until gravity exerts itself.

Bollinger: it tells a similar story of an imminent top in terms of price on bearish divergence, with a M there and a bearish crossing as well.

Other momentum indicators are all telling a similar story of an imminent intermediate pullback, almost a half-time break.

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Unless you have a huge pot, as a private daytrader, in the year 2009, I would definitely recommend to avoid gold, Japan, Hong Kong and perhaps currencies as well. It would be easier to trade something closer to reality where there is a pull of forces between both parties, not in parabolic run either big up or big down. You think it would be a perfect market if you get it right; but think again, always think about what if you get it wrong, it could easily wipe you out for good.

good luck.