HKHSI and NASDAQ Downturn (5/5/2000)

Major Correction in the Horizon (4/15/2000)

Prof. Kai Keung Mark is a retired professor, Dept. of Biology, The Chinese University of Hong Kong and Dept. Head and Principal Lecturer, Dept. of Science, Hong Kong Institute of Education. He has three biotechnology patents. He uses his understanding of high technology to forecast market movements . He has published 13 articles in Financial Trend, and leading Hong Kong stock analysis journal plus many other Mark's letters since 1987. His prediction reliability rate reached 80%. He accurately predicted the October crash (10/18/87), the bottom level of 1990(3/5/90), the peak level of 1994 (5/11/92), the peak level of 1997 (2/12/96), the peak level of 2,000 (8/22/99), the peak in March 2000 (2/20/2000), the bottom in September, 2001, the US bottom in 2003 (5/28/2003), the HK bottom in 2003 (6/13/2003), the US peak in 2007 (11/14/2007), and the HK peak in 2007 (1/9/2008).

Bull Sign from DJIA

DJIA responded figorously towards the recent 0.5% interest rte cut. This resulted in breaking the 25-month major down channel (see figure 1) up side, and produced the first bull sign that US stock market is about to turn into the bull phase. The major down channel mentioned above consists of two parallel lines. The top line is drawn from the tops, and is called the resistance line. The bottom line is drawn roughly from the bottoms, and is called the support line. Now DJIA rose 342 points in one day, and has broken the resistant line upside, indicating that this major down channel will trun upward.

The short-term DJIA daily chart (fig 2) shows that DJIA rose from 9,500 and hgit the uppoer resistance line around 11,000, breaking the rising support line. It made a small correction and clearly broke this imprtant resistant line in onne go. Before this breakthrough, DJIA has already accumulated a 1,500-point rise. It should be a big correction, so the upsurge force must be quite significant to achieve the present outcome.

In the last few months, HSI followed the US trend. My March article (Marchj 22, 2001) continues the bearish outlook because the US market change has not surfaced. During the last bear phase (bearIII), HSI formedd a very long downward move, producing a long fan lline I (fig 3). The correction also produceds a support line A. When this support line A was broken downside recently,m the dictation of fan line II is obeyed. First ,it rose after breaking the support line A downsiide, and hit this fan line II, resulting in a sharp drop. Second, when the news of the 5th interestrate cut reached HK, HSI also rose significantly, and hit fan line II again, but bounced back immediately. These behaviors demonstrated the existence and power of fan line II. Therefore, fan line II has its significane in technical analysis. With this sharp break of DJIA, it also trigfgered HSI to break the fan line II upside, and also produces a bull sign for HK.

The last low of HSI is 12,000 and is the third down wave after the three up waves (I, II, and III).

Given the present signal, the unreasonably pessimistic 10,000 prediction calculated from the double, toip features (March 22, 2001) will not materialize. Although HSI has shown signs of bull run, MFN is still an uncertain factor.