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 confirmed after a long wait

The author's Feb. 8, 2005 article points out that HSI's bull III is coming, but surprisingly, the bull II correction took 6 months to complete with very little drop while the bull I correction drop over 2,000 points but last only 3 months. One can understand that bull II has smaller rise ( 1,500 pts. ) than bull I ( 5,500 pts. ), so the correction should also be smaller, but one expect it to be between 1/3-2/3 of the rise which should be between 500-1,000 pts. However, the bull II correction was slightly smaller than anticipated. To compensate for the smaller drop, the length of correction has been extensively prolonged. At the later part of the correction, a converging triangle formation appeared with dropping trading volume. The price oscillated sideways until it hit the fan line II (see fig. 1), and forced it upwards. Finally, on mid June, the converging triangle formation was broken up side with significant rise together with big volume, a clear break sign. The up move also broke a large triangle formation starting from Nov. last year.

These movement clearly signals a bull III phase. The rise after breaking the long triangle, reach 14,375 pts that challenge a long and large channel between 13390 below and 14300 above, ( see fig. 2) Now HSI has risen above this large channel, and clearly put HSI on the bull III rising track. This would lead HSI reaching 16,000 at the end of 2005 or at most early 2006.

HSI cannot move alone, and have to align with other markets world wide. DJIA is still in its bull phase, but moving very slowly upwards (see fig. 3). NASDAQ also remains in bull phase, and is rising a bit faster than DJIA ( see fig. 4 ). The US rising interest rate as well as high oil price are reasons that slow down the US economic growth. With a slower growth, the period of economic boom may last longer, hopefully reaching 2007.

The Chinese market, i.e. Shanghai A, is still in its bottom formation. The author did remarked in his Feb,8, 2005 article that from technical consideration, the Chinese market is expected to have a long drawn out bottom which is true in the past few months, and is also expected to be so in the coming months. It is surprising to find a booming Chinese economy with growth rate between 7-9% to have a stock market with a long drawn out bottom. The author wants to add one more reason in addition to those given in the Feb. 8,2005 article. The release of government owned share of public companies ( government are major share holder) into the stock market is the most likely explanation for this strange phenomenon.