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).

A Significant Rebound in Chinese Markets

I have been able to perceive the future major index movement in the Shanghai and Shenzhen markets, and made accurate predictions as illustrated in all my past articles on Chinese markets (4/28/2001; 7/5/2001; 8/14/2001). The only variation so far is that I over-estimated the support power of the neckline (NL). I expected a much longer time to penetrate it (8/14/2001). The general picture given is correct in that after penetrating the neckline "the down move can be fast and devastating, and will dwarf the plunge that the Chinese markets now experiencing" (8/14/2001). Now this vivid statement has been accurately confirmed.

My success is due to several elements. Most importantly it is because the Chinese market movements are significantly driven by mass psychology. As a result, the signals are clear and free from interference by international financial institutions, which are not yet allowed to invest in the A shares. Few investors are accustomed to technical analysis. In Chinese financial columns in newspapers or journals, few charts are given. Even if given, it is only the raw data without additional analytical lines as given in my articles. These technical signals, being rarely used by investors, retain their normal features without distortion. My role is to understand the chart language, and objectively deciphers the message without reservation to the general public.

Premier Zhu Rongji did try to cool off the Chinese stock market, resulting in its down turn. Now he may feel that the cool off is enough, and temporarily suspended the release of government shares. He also drastically reduce the stock trading commission from 0.4% to 0.2%. This certainly will increase the Chinese stock trading and volatility. From the charts, I now see the upturn signal for a big rise for both the Shanghai and Shenzhen markets. Both A share markets produced their first fan line (Fan Line I) (see Fig. 1 and 2), but have broken this fan line upside recently. The expected rise is a correction of the extensive down turn, and this big rise should not rise beyond the neck line (NL). The neck line, after being penetrated down side, has turn from a support line into a significant resistant line. After this rise, another down turn will again take place to drop to a level lower than the lowest points now recorded to produce the second fan line (Fan Line II). This down move starting from May-June 2001 will take about one year to complete. Although the Chinese Government showed indications that they feel that the market have corrected enough, and did take some measures to cushion its fall, market behavior is powerful and beyond the control of government or international financial institutions once its momentum gets going. In summary, Chinese market is in its down turn, but will have a significant rebound in the short term. Stock market is a leading indicator of economic situation. So Chinese economy may slow down somewhat next year (2002).