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), and the bottom in September, 2001.

The recent down-break of DJIA is a significant bad sign for the world market. DJIA had form a down triangle during July and August, and has the potential to change into a down wedge. With seven consecutive interest rate reductions and tax refund, most analysts expect some positive response in DJIA as well as other leading indicators. Therefore the sideward movement of DJIA during July and August may imply some good sign that the index is consolidating before an up-break to start the next bull run. However, the recent (August 30, 2001) down-break of the triangle formation shattered all these hopes. It also implied that the bear run may take longer to complete, although it is in its last bear phase. Since DJIA has produced a long channel for two and a half years, and a support line above 9,000 points, DJIA is likely to go down further in the nine thousand something territory before a base is formed, and an upsurge momentum is recovered.

HSI of Hong Kong showed very weak response these days, and produced a narrow and long channel with low volume. This is the characteristic behavior of the late phase of a bear market. However, with such bad signal from DJIA as well as US economy, it is unlikely for HK market to run up against the herd. So, it may continue on its slow downward drift within its channel. The author did notice the implication of the double head formation between March and July, 2000. In his March 22, 2001 article, he did state "now the chart suggests that HSI may reach 10,000 under a very strong fundamental condition listed above, which is hard to believe." Now that HSI reaching 10,000 points is quite real, and the fundamental has turned sour to meet the prediction of the chart or the invincible had behind it. This is a rare occasion to illustrate the power of the invincible hand.