Commentary

good morning,

hope u guys have a nice weekend, now i will give my reviews on the markets.

DJ make a rebound negation on thursday, bearish trend to continue. remember i said base on momento, rebound in place until a negation or poor formation. asian markets confirmed the negation with a significant fall on friday. Currently, all indexes are under ST bearish mode, so do manage your risk.

as for monday, a gap down opening is expected due to DJ's closing, but some form of intraday upmove might occur due to intra term formation. risk level for longs in the ST n MT is considered high, so try to keep to intraday until proper strength enters. shorts are still safe, technically speaking.

base on the Wind Water master, march is the month where alot of events will occur, man made and natural, but more on the negative aspect. this is just some extra information if you are interested, haha. For me, i dont depend on them, but i will be testing on their accuracy for this year.

have fun...Heiwa

send me a comment or email if you have any questions or opinions.

On the major US macro news to watch out for this week:
Feb retail sales (Thursday),
CPI and University of Michigan consumer confidence index (Friday).


KLCI is expected to trade lower after the announcement of the stunning 12th
General Election results. Barisan Nasional (BN), led by Prime Minister Datuk
Seri Abdullah Ahmad Badawi, failed to retain two-thirds majority although it
still won a simple majority that would allow it to form the government.
Besides losing Kelantan, BN also lost another four states - Penang, Perak,
Selangor and Kedah - to the opposition.

Trim index target to 1,320. We foresee uncertainty over the political scene
and the status of projects announced in the last two to three years. In view of
the new political uncertainties, we are lowering our index target from 1,500 to
1,320.


Technical Analysis

Further volatility ahead; Dow in wave 3

In recent weeks, we have stated that the Straits Times Index’s (STI) inability
to break the downtrend line should bring the index down to retest its lows.
We had stated 2700 as a technical support level. That view remains.

In this report, we feature the wave count on the DJIA. The underlying pattern
suggests that the index is in the middle of a wave 3 decline, which could
easily bring the index down towards 11400. Thus far, we have not seen
volatility expand to the downside, though there are signs that it is imminent.
The chart on page 2 shows the spread on Moody’s AAA rated corporate
spread against 10-year US T- Bonds. Despite, a series of Fed rate cuts and
planned fiscal stimuli, the credit profile of top corporate American companies
continued to deteriorate as shown in the spike in credit spreads.

A theoretical “resistance” is the 245bp spread achieved in Oct 02, which incidentally
marked a reversal in the DJIA at 7197. We think as wave 3 terminates,
spreads will widen towards the prior 245bp. The widening in spreads will be
even more dramatic in lower grade corporate bond ratings. In any case, such
a move should pave the way for a wave 4 rebound in the DJIA, which should
bring the index back up to the downtrend line.