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 review of my own forecasts

The autor had written nine articles to forecast the likely course of development of the eight major markets since July, 2007. Now, several months have past, it is time to assess the reliability of these nine articles (July 27, 2007; Aug. 14, 2007; Sept. 2, 2007; Sept. 9, 2007; Nov.14, 2007; Jan. 9, 2008; Jan. 31, 2008; March 30, 2008; April 5, 2008).

The July 27, 2007,"Market top warning" is the first article of the series. The key point of this article is that the author saw clear bear signs from NKY, plus supporting evidence from UKX, CAC, DAX, DJIA, NASDAQ, and HSI. This is the earliest bear warning known to the author. So, this is an important and early warning on the turn of world's bull market to bear market.

The Sept. 9, 2007,"The first confirmed international bear signal " article is the author's second alarm call with firm statement that a bear turn in the international market was confirmed. This is still a very early confirmed bear call. No one has made a confirmed bear call on that time, so the author is correct, and made the earliest confirmed bear call.

In the Nov. 14, 2007,"International bear signal strong and clear" article, the author summerized all the top formation features of the eight major markets, and point out that all eight markets have shown clear technical signs that the top have arrived. So the author concluded as in the title that the international stock markets are now in the bear cycle strong and clear. This is the strongest statement the author made. However, even with such a strong advice, how many investors valued such a good advice and sold?

The Jan.9, 2008,"Bear finally reached Hong Kong" article is now confirmed to be correct, and earlier than other market commentators. He also objected tycoon Lee's forecast of HSI reaching 33,000 points early 2008, and is now also confirmed to be correct.

The author has made many remarks about the Chinese market. He already declared that the Chinese market has developed into a bubble (Jan. 4, 2007) the earliest one to make such remark. He is very nervous about its potential danger (Nov. 14, 2007; Jan. 9, 2008). In the March 30, 2008 article, "Bear and bull elements-China markets" , the author clearly indicates that the Chinese markets will fall extensively, and openly advocates investors to SELL. He also gives eight reasons that the Chinese markets should go down, and all of them materialized. The Shanghai A index dropped over 87% of its rise within one year, so it clearly indicates that the market is in bubble form, and the bubble has burst leading to a very extensive drop.

In the April 4 article, 2008,"HSI rebound is coming", the forecast is very accurate. HSI did turn from 21,000 points, and rebounded back to 26,200, even higher than the 26,000 points in the forecast (April 4,2008). Even more importantly is his remark: " This should be treated as opportunity for an escape window rather than opportunity to increase holding, because ....bear phase II (Bear II) may set in with even lower index level after this rebound." The author is very proud to make this very accurate forecast, and HSI did drop again in three waves in the bear phase II (Bear II ) and hit 11,015 points on October 27, 2008. The bear II arrival was also given in his forecasts (Jan.28,2008), and the condition was given as when the rebound at the end of bear I penetrated the fan line drawn from the top, then the market will enter bear II. This is true for HSI as given above, but also true for DJIA, NASDAQ, NKY, UKX, CAC.

Some general remarks:

1. The author reports what he observes as well as his conclusions from his analysis honestly without reservation, because he is a scientist based on facts. As a result, his presentations usually are quite different from the practaice of most financial commentators.
2. Another surprising observation is that those finance bosses who earn over one million USD a year do not perform any better than the average investor, so thier income is not justified by their performance.
3. The collapse of the financial institutions should implied that their high income leaders have ignored many many bear signals noticed by the author such as the sub-prime bonds, long down swing of the US property market, bull turn bear in US and world stock markets, signals from the US business cycle. But why? Some explain that they go for very short operations, and lose sight of the big picture.
4. There are many examples that the world's major financial houses do not provide good investment advice during critical moments. During October-November, 2007, when the author perceived firmed bear signals (Nov.14, 2007), these financial houses still advocate strong buy rating. The author can offer two alternative explanations: either these international big financial institutions still do not perceived the tsunami is minutes away, which is hard to believe, or, these international financial house only look after their big clients who want to get out, thus can only sell their stocks to the enthusiastic but unsophisticated investors who look to the big financial house for guidance.
5. The author is also puzzled by the fact that rich people as well as fund managers lost hundreds of billion dollars while the author can perceived that the storm is coming, and sold all his stocks then watching from a safe position that many suffered great loss because they have very poor understanding of the bussiness cycle. He asked one simple question: Since they are so rich, why they do not have knowledgable people in their investment team. One very cheap solution is to invite scholars and experts to explain the outlook in regular lunch parties would have saved enormous amount of wealth that go down the drain. The old Mr. Kwok is very successful, and this is his practice, and part of his success secrets.
6. From the fact that the author's nine articles are all correct implies that the author must have mastered some signals from the market that tell the dirction of movement, but this assumption must also implied that the market movement is not random as some believe. The author, being a biologist, treats the market like a dog. Observe their behavior, and predict the market next move of the dog. This is the core of his secrets.
7. The author is not only writing stock market forecasts, he also trade Hong Kong stocks, especially penny stocks. His performance can be illustrated by his antique exhibition last year on Chinese bronze mirrors Chinese bronze mirrors , and this year on Chinese jades.

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   The information above is supplied by the author specially for InTechTra's Hong Kong Stocks Report. The opinions in this special column is solely that of the author and may or may not represent the views of Hong Kong Stocks Report. InTechTra is indemnified for any damage or loss that might be associated with the use of the information.

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