What are we waiting for? Part I

The Short-term Bearish Case

Someday, the market is so dull that all you can do is just sit there in front of the screen & ponder: "What are we waiting for? What else does the market need? Are we missing something here?"

Before we get to the more interesting (read: speculative) stuffs, let's take a look at the market, now & here.

















Chart 1: CI's daily chart as at August 2

From Chart 1, you can see that the CI is trying hard to stay above the 935 level. It has been here for a good 5 days and it begins to resemble a rounding top. The daily MACD has turned flattish and, any day now, if the CI takes a 5-point drop (or worse), the MACD will do a negative crossover and you will have a SELL signal. The immediate horizontal supports are at 930 & 920. A tentative uptrend line can be drawn & it may provide supports at 915-920.

In Mesdaq, you have a different story. It has pulled back from the recent top but the big question is whether the correction is nearly completed or is there more correction to come. I believe the Mesdaq correction has more room to go. I feel that it is being artificially held up by a few hot stocks; some of which have begun to falter (see Iris, for example) while the rest of Mesdaq counters are devoid of any activity. I would be more comfortable if it were to pull back to the June low of 104 or the immediate uptrend line support near the 100 level (see Chart 2 below).

















Chart 2: Mesdaq's weekly chart as at August 3

For some idea of how Mesdaq may perform in the coming weeks, one can take a look at the Second Board (see Chart 3 below). The Second Board is now resting on its horizontal support at the 88 level after making a high of 103.38 on May 9. The next supports are at 83 and 80.

















Chart 3: Second Board's weekly chart as at August 3