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).

The forecast is correct. Your choice

The author's recent araticle "time to sell" recommended investors to start selling in steps or look for turn signals, because the author foresaw that the up swing would end, and the bear III drop would come. This forecast is correct and timely because immediately after this article is released (May 14, 2009), the world's seven stock markets started to form top formations followed with clear down turns to confirm the top formation. The top and turn features of all the seven world stock markets are described below.

1. HSI is given first because it has the highest rebound. The bear II drop starts from 26,200 pts on May, 2008, and drop to 11,015 pts on Oct. 2008, a drop of 58%, and made a big 74% rebound to 19,161 pts on June, 2009. HSI rise from March till June,2009 within a very long up wedge, and end with a classical double top formation (see fig. 1) sllightly below 19,000 pts. The key turn signal is the down side break of this long up wedge lower line on June 15, 2009. On top of the turn signal from blue chips, turn signal also come from the extensive rise of penny stocks.

2.CAC started its bear II drop from 5,140 pts on May, 2008, and reach 2,520 pts on March, 2009 with a drop of 51%. It then made a 34.5% rebound reaching 3,390 pts on June, 2009. The rebound oscillate within a long up channel between two parallel lines. the index touches the lower line from above nine times, then penetrate the lower line after the nineth contact. The index then rise to make the tenth contact from below, the kiss goodbye (KG), follow by a dramatic drop (see fig. 2). This is a very beautiful chart formation which illustrate clearly that the two parallel channel lines are support and resistant lines with value changing with time (the lines are rising). The good bye kiss from below, and depart rapidly is even more dramatic and impressive to a chart observer.

3. NASDAQ started the bear II drop in three waves from 2,550 pts on may, 2008, and reach 1,315 pts by March, 2009 with a drop of 48%. It then made a 41.4% rebound reaching 1,860 pts again on June, 2009. (see fig. 3) The rebound form two up wedge I and II. The up wedge I lead the rise in a steady way, and also fulfil the calculated extend of rise base on the double bottom formation. The up wedge I lower line is called Fan I (fan line I). It was broken down side, and form the second up wedge (II) with the lower line Fan II starting also from the lowest point (H2). The turn signal come when the up wedge lower line (Fan II) was broken down side on June 15, 2009.

4. NKY started its bear II drop from 14,600 pts on June, 2008 and reach 7,010 pts on March, 2009, a drop of 52%, and rebound to 10,135 pts or 44.6%. This rebound oscillate within a wide base and long up wedge with ten contact points with the upper line, and six contact points with the lower line. The key turn signal is the penetration of the lower line near the apex (see fig. 4).

5. UKX started its bear II drop from 6,400 pts on May, 2008, and reached 3,500 pts by March, 2009, a drop of 45%, and rebound to 4,500 pts or 28.6%. This rebound oscillate within an up channel with eight contact points with the lower support line. This channel formation switch to an up triangle formation with three peaks with the level upper line, and a rising lower line. The key turn signal appear when the index penetrated downward the triangle lower line (see fig. 5).

6. DJIA is the world's most important index. The bear II drop started from 13,050 pts on May, 2008, and reached 6,505 on March, 2009, a drop of 50%. It then made a 34.8% rebound weaker than NASDAQ both on June, 2009. The chart pattern is less clean cut but still related with NASDAQ's pattern formation. As a result, it was presented at a later time. The chart pattern of DJIA can be described as two consecutive up wedge I and II similar to NASDAQ,also with two fan line I and II as the lower line of the two consecutive up wedge I and II. The key turn technical signal is the downward penetration of the lower line of the up wedge II (see fig. 6 ). The DJIA chart pattern showed a leveling off feature, hinting that the force of rebound is weakening during the second half of the world's up swing.

7. DAX started the bear II drop from 7,210 pts on May, 2008, and reached 3,660 pts with a drop of 49.2% by March, 2008. It then made a 40.5% rebound reaching 5,144 pts on June, 2009. The rebound started within an up channel, then converted into an up wedge. After the 5,144 pts peak, the index drop below the lower line of the up wedge. It rise just below the lower line, and finally reach the lower line from below as a kiss good bye ( KG ), follow by a dramatic drop just as CAC did. This is the key turn signal the author is waiting for some time (see fig. 7).

In summary, the author do not believe that the bear cycle has ended, and the bull cycle is coming as many financial houses and big investors have advocated. So we are facing an out look of drawn out market down turn, so causion and patient are the two important charaters needed to deal with such situation.