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).

Market top Warning

The author had stated in the last two articles ( Mar.13,2007; Mar.11,2007), that the world markets were in the late bull phase that is lasting longer than the author had anticipated.

Now the author notes that a top formation has appeared. It can be a correction or a final top, thus investors should be vigilant about such possibility.

Such turn signal appear a few days ago in NKY (Nikkei 225, see fig. 1), UKX (see fig. 2 ),DAX (see fig.3), CAC (see fig.4). These charts produce an up wedge, and at the end produced small double or triple tops, and then break the up wedge formation down side with extensive drop as expected from up wedge formation. NKY produced a stronger bear signal, because the long up wedge produced the second peak of the big double head.

DJIA (see fig. 5) and NASDAQ (see fig. 6) demonstrated its turn signal much later than the European and Japanese markets.The up trend was only broken on July 26, 2007.

HSI of Hong Kong is having a very strong bull run recently because China opens up its money flood gate to Hong Kong to reduce the unhealthy rise of its stock markets which are already in a big bubble. Such measure is rare, and is not expected by the author. The HSI turn signal appear in HK, 6 Hrs ahead of the US markets. Please note that the closing of HSI of July 26 had penetrated the sharp up wedge lower line by a clear margin (see fig. 7).

From the US business cycle outlook, interest rate has made an extensive rise from 1% to 5.25%, and then peaked for almost a year. Housing market turn down close to two years without any sign of recovery. Inflation is rising slowly, and is considered as the No.1 enemy of the economy. Therefore, it is a hard decision either to raise or lower interest rate. So the US economy is still between the bull and bear phase. Stock market usually is 3-9 months ahead of the economy, but from the author's point of view,the stock market is more bullish than the economy justified, but this usually occur in late bull phase. As a result, the tide can turn any time.