Dow (still) above 7.7k......Advantage bulls??

Dow Jones Industrial Average- (8378): Near term Trend : Bearish (Impending corrective rally). Last week Dow lost just over 5.4% and manage to float above the panic low of 7.7k(10th Oct) despite of a rout in the global equity markets. Is it a signal of strenght? Since Oct 2007 it has lost more than 45% value & the current week is 55th week from the absolute top of 14k. Being a Fibonacci number (55) the current week could lead to a "important" reversal (at least time being) if the bulls swung back in action, preferably with a "weekly close" above 8.9k.On the Monthly chart, 200 'months' (not days) moving average (current months value 8.8k) has provided "excellent" base formation (support) in the year 1978-1982 (see monthly chart). Now in this month, first time since 1982, the Dow has once again fallen back to this "long term" support line. In short, the level around 8.8k could emerge as a significant "support" zone for the index, at least in the immediate near future.

On the weekly chart, since top, the Dow is moving in perfect falling parallel channel (see dotted line on the weekly chart) & in this month it has bounced back 3 times from the lower end of the parallel channel (for the current week value is around 7.9k). This suggests at 'halt' in the downtrend OR a temporary respite for the bulls, provided the Index managed to float above 7.7k-7.9k.There is another possibility of a "Expanding" triangle (marked in dark line on weekly chart) formation on weekly charts, with last 'e' leg has ended at 7.7k.All these observations suggests a "fair" chance of 'recovery' in Dow provided it able to move above 8.9k on a weekly closeing basis. At the same time it is equally difficult task to take call on whether this is corrective rally or a 'end of the worst". Lets see how the things unfolds in the next few weeks/months.

Hongkong Bulls : Where are you guys...??

China- HangSeng (13760):

Near term Trend : Bearish (Pending reversal) The Hangseng lost almost 58% since Nov07(not a big deal...everyone lost). See the inlaid quarterly chart.In December 1987 the index was at 2086. In a subsequent roaring bull market the index went up & peaked at 27254 in December 2007. This entire rise (20 years) was within the perfect rising parallel channel ( & not random). For the current quarter i,e, December 2008 (again December - coincidence or time cycle) the lower end (of parallel channel) value - i.e. likely support - is 13403. And today's (23rd Oct) low tick is 13403. Now the next important point; 0.618% retracement value of the entire rise from 1987 to 2007 is 13497. Today's low tick is 13403. Now see the daily chart (above). Latest price action shows "contracting" tendency; i.e. both rallies and falls are getting smaller than immediately preceding rise/fall. This is probably a good "accumulation" pattern. But needs bullish confirmation with quick price move above 15325-15425. In nutshell, the bulls are at important time & price cycles, a decisive action from "bulls" camp will confirm the "beginning" of the end....at least in short to medium term.

China : will the dragon retaliate...?

China- SSE Composite (1875):

Near term Trend : Bearish (Pending reversal) The bull run started in Oct 2005(1067) has ended in Oct 2007(6124). Since then the SSE index felled in a perfect falling parallel channel. See the inlaid monthly chart with respective support/resistance level(s) indicated by arrows.

Before turning up in 2005, the index faced consistent resistance near 1740-1780 mark in 2001,2002 & 2004 (see down arrows). Technically, important resistance zone (on the way up/down) turns into "support" zone, once price moves above/below it. In that sense, now, this 1740-1780 zone should act as a support zone for SSE index on its way down; which is what happened, so far, with lowest down tick of 1802 on 18th Sep 08. Second, is it just a coincidence that we are again in the month of "Oct" with 70% value erosion, in just 12 months? I think we should give "some" respect to this time cycle. Observe that (on the daily chart) the SSE index went way ahead of global leader Dow Jones, on its way down. On 18th Sep Dow was 11019 & Shanghai index was 1895 (low of the day 1802, lowest tick so far in 08). Since then Dow is down over 22% (close basis) & SSE 1.1%. Looks pretty confusing? It could be a) SSE index, as usual, outperformed the Dow on its way down (which is what happening since top) and waiting for a fresh down move, when the difference between two is narrowed OR b) The SSE index has shown lot of resilience despite of global turmoil in the current month. Considering all I am betting on option 'b'. Once the index moves above 2.2k,the things will turn bright (as explained in above para).....& on the downside 1740-1780 is the stop. Lets see......!

World Index at major support of "Golden ratio", expect rally across the world markets

World Index (335): (Based on 44 active stock market indices of the world)

Near term trend: Positive (Corrective) The spectacular bull run (2003-2008) represented by perfect 'rising' parallel channel has ended with a downward break in Jan 08. Since then the "World" index has seen value erosion of over 45% in just 11 months (top made in Nov07). Interestingly, the fast and furious fall has likely to 'halt' (no confirmation for using word 'end') near 0.618% Fibonacci retracement level - popularly known as "Golden ration" -of the entire rise in the world markets since 2003. Further, the month of "October" has played a crucial role in economic cycles, world over. These two important cycles viz price action near the golden ration & October (time) cycle are indicating towards a corrective rally in the global stock markets. However each individual market is likely to play lead/lag role in the next few days/weeks. For e.g. Dow is already up over 19% since the low of 7773(10th Oct). Observe the steepness of the fall in each subsequent "perfect" falling parallel channels on weekly chart. The recent one (dark blue- Channel 3) has supported the price action in the most violent week, expect a rally towards upper end of the channel (No 3).

Recovery if closed > 1216

Argentina Merval Index (1175):

Near term trend: Turning Positive (Corrective) Mimicking the global rally the Argentina Merval has risen over 1000% since Nov 01. Watch the perfect rising parallel channel on monthly chart. Which was broken in June/July 08 resulting a sharp cut in the subsequent months. The index lost over 51% since last October. Now poised for a recovery, provided able to close above 1216 (first indication of strength) & the most crucial level of 1349 in the next few days/week, preferably in Oct 08. Failure to close above 1216 in near future will lead to slow and steady drifting towards next crucial levels of 11k.