The market will again pause and consolidate around this level for several weeks before continuing the uptrend breakout, says Daryl Guppy. » Read More
South Korea's benchmark index has been an important barometer for the rest of Asia's markets, so a recent fall below the trend line of the Kospi is significant.
There are two conclusions we can draw from the chart.
The price of oil is rising and it is unwise to dismiss this as a result of the increase in tensions in the Middle East. These political problems have added to the upside pressure, but the oil price uptrend had already been set. If, or when, the political problems are resolved, uptrend is expected to continue, according to the charts.
U.S. dollar down, gold up. Right? It's simple and common investment axiom. But guess what? It's been absolutely wrong for more than two years.
The Nasdaq has been the leading indicator of the U.S. equity markets since March 2009, when the economy began its recovery. The Nasdaq leads and the Dow follows. So it may be worth checking the Nasdaq chart for clues on where the Dow may be headed.
India's stock markets have taken a beating this month, after chalking decent gains in 2010. The 25 basis points rate hike by the Reserve Bank of India on Tuesday didn't help sentiment either. The seventh consecutive rate increase is stoking fears that the tightening could hamper economic growth.
So has the market's upward momentum been derailed? And is the change in direction long term or is it just a bump on the track?
A look at the benchmark Sensex's chart show two features which suggest a temporary derailment.
Since their remarkable recovery in 2009, China's stock markets have since been characterized by a long drawn-out sideways movement punctuated by rapid rallies and equally precipitous falls. Many of these have been initiated by changes in Government policy, particularly in relation to changes in interest rate and bank reserve ratio policies.
The Government has been applying the classic Chinese strategy of 'pulling-the-firewood-from-beneath-the-cauldron'. This is done by deliberately removing the heat from the market by pricking speculative bubbles without creating a general market collapse and managing the need to re-orient an economy that was too dependant upon exports for growth.
Australia has the reputation for being a 'lucky country'. It's a term coined in irony by author Donald Horne who believed Australia was fortunate to have prosperity in spite of its leadership. However, the unprecedented flooding in central Queensland has the potential to bring its lucky streak in the past 50 years to an abrupt end.
U.S. markets are looking to end off the year on a positive note, hitting new closing-highs on Wednesday, as investors remain optimistic about the prospects for equities in 2011. But how much further can this uptrend continue for?
When a market has been moribund for so long, any movement, no matter how small, takes on additional significance. The Dow's rise above 11,600 is a move towards the upper part of a sideways trading range that dominated the markets in 2010.
It is driven by changes in money supply conditions created by the latest round of quantitative easing and some suggest this does not reflect any fundamental change in economic conditions.
The move from the trading band low at 9,600 to 11,600 looks an impressive 20 percent but it hides a generally weaker performance of the market when measured against Asian markets.
The changes in the trend of the U.S. dollar are helping to push commodity prices higher. The impact of this is also seen on the NYMEX oil chart, where prices have broken significantly above the historical resistance of $88 in recent weeks. Tensions in the Korean peninula are expected to add to the upward momentum.
Hong Kong remains the primary entre-port into China and north Asia investments. And for this reason, its market quickly feels the effect of decisions made in Beijing, and the tensions in North Korea.
The sharp sell off in the Hang Seng in reaction to the recent North Korean attack dropped the benchmark index back to retest support near 23,000. This reaction was stronger than the reaction in the South Korean stock markets and reflects the fear of Western market participants rather than the assessment of local investors.
Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.