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.

Bull returns to Chinese markets

The author's last forecast (3/13/2002) is "bull should return to Chinese market in the later half of this year.", and this prediction is 100% correct. Now Chinese markets have moved up again breaking the third fan line (fan line III) implying that the bear market since June, 2001 have ended, and bull returned as indicated by this powerful three fan rule. For example, the Shanghai Stock Exchange index SSE (fig. 1), the second down move reached 1350, produced a double bottom, and moved up to break fan line II, and continue the up move till 1700, producing a triangle, and breaking the down side. The up move that followed plus the good news (The Chinese government will terminate the release of government own shares into the market which was a key proposal of Premier Zhu Rongji) produced a powerful up surge, and easily break the third fan line (fan line III) up side, and declare that the bull has returned.

From Fig. 1, one also perceives an inverted head and shoulder formation with the Oct. 01 low as the left shoulder, the Feb 02 low as the head, and the June low as the right shoulder. The neckline is drawn between the two correction rises. Now the index have penetrated the neckline upside to confirm that the bull has return. The extent of the rise can be calculated from the chart. As the distance from the neckline to the head (1740-1350 = 390) will equal or above the same extent from the point of penetration of the neckline (1640), so the extent of rise should be 1640+390=2030. This is a strong bull.

From the author's point of view, Premier Zhu Rongji do not need to retract this key proposal to save the Chinese markets for the Chinese markets have almost completed its downward course, and will return to bull phase by itself. The termination decision is bad for China for the vast number of poor people especially those in inland who need a relief. This termination decision also imply that Premier Zhu does not have a powerful financial team to inform him that the bull will return without this decision.

The author's prediction on HSI was hit by some surprises. HSI did penetrate 12,000 given by the title (3/13/2002), but it did not proceed to a higher level as expected. The following down turn is clearly dragged down by DJIA due to a series of accounting frauds in several major companies, resulting in significant loss of public and international confidence in US companies. These scandals also triggered the long down turn of HSI that followed, beyond anybody's expectation.

Given this surprising but powerful impact by DJIA, HSI follows a consolidating move. HSI forms a box or channel with upper resistance line around 12,000, and a supporting line of 10,400 ( see fig. 2). The author still believe that HSI will penetrate 12,000, and later reaching 13,500-14,000 range, but the timing has to be delayed some what due to this consolidating move of HSI.