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Charting Asia with Daryl Guppy

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  Tuesday, 8 Dec 2009 | 3:01 AM ET

How to Get 70% Returns From Clean Energy: Charts

Posted By: Daryl Guppy

Copenhagen might be a hot topic of discussion, but the winds of change have failed to ignite the DJ Alternative Energy Index to a new trend. This index is becalmed in a sea of indifference, trading in a flat trading band.

We'll start by defining the activity (or lack of it) from a charting perspective. Then we'll look at two break out patterns of development which show where changes may be afoot.

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  Tuesday, 24 Nov 2009 | 1:53 AM ET

Gold Will Collapse Like Oil Did in 2008: Charts

Posted By: Daryl Guppy

The gold price has moved quickly and it has developed an important new uptrend characteristic. This so-called 'parabolic' trend is a dangerous type with a high probability of a sudden collapse.

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  Thursday, 19 Nov 2009 | 2:51 AM ET

Dollar Rebound? Wait At Least Another 10 Months

Posted By: Daryl Guppy

The Dollar Index chart provides some insights into the decline of the U.S. dollar, and ultimately its position as a global reserve currency.

The best historical view comes from the monthly chart. It shows the dollar has been locked in a substantial downtrend since 2002 when the Dollar Index fell from $1.20 to $0.81 before a rally to $0.91 followed by a fall to $0.71.

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  Thursday, 5 Nov 2009 | 5:51 PM ET

$1,160 is Gold's Next Target Level: Charts

Posted By: Daryl Guppy

Turn off the lights and you can see the gold bugs glittering. The rapid rise in the gold price driven by Indian central bank buying appears to confirm their wildest dreams.

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  Tuesday, 3 Nov 2009 | 12:19 AM ET

Why Nikkei Won't Top 10,500 in Near Term

Posted By: Daryl Guppy

Japan's benchmark stock index the Nikkei Average fell below the 10,000-level for the first time in three weeks last week, and has since had little success maintaining its upward momentum.

From a chartist's point of view, the index will continue to struggle in the near term.

The Nikkei has a similar behavior to the Korean KOSPI Index, which I've explained in an earlier blog, defines the pattern of market recovery behavior in Asia .

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  Tuesday, 27 Oct 2009 | 1:59 AM ET

MSFT Stock Rise Has Little to Do with Windows 7

Posted By: Daryl Guppy

Its tempting to suggest that the 'V'-pattern recovery seen on the Microsoft chart reflects the behaviour of the unpopular Vista operating system and the announcement of its replacement with the newly released Windows 7.

According to technical charts, however, that's not the case.

The rebound from the lows near $15 did not coincide with the rumours of Vistas demise and replacement. The rebound reflected the normal behaviour of Microsoft.

This is not a stock that has long and stable trends. It is a stock that has extended rallies and retreats which makes it suitable for position trading. These are directional trades that may last for several weeks, or months.

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  Tuesday, 20 Oct 2009 | 3:18 AM ET

What Now for Dow? Look to China for Clues

Posted By: Daryl Guppy

Who follows and who leads in markets? The answer is surprisingly different to the answer most people assume is correct.

Intermarket technical analysis is a useful strategy tool for asset allocation. Its also a useful tool for working out what may happen in the future. Its too easy to look at markets in isolation, or to use outdated assumptions about market relationships. This is lazy thinking and in a changing market environment it can cost a fortune.

We publish hundreds of charts each year in our financial newsletter publications and in columns for international and Chinese financial media. The chart below is the probably the single most important chart you will see in 2009. You will need to put aside lazy thinking and assumptions to fully understand it.

This is not a technical chart. It’s a simple combination of 3 indexes, each displayed as a single line. Unlike many comparative charts the indexes have not been rescaled to a single starting point so we can see relative performance in percentage terms. This is not the significant feature of this information.

The charts have been time adjusted so it is easier to compare the behavioural characteristics of the three markets.

We use the Dow Index and the Australian ASX S&P 200 index (XJO) as representative of markets outside the US. The DOW and XJO charts have been time shifted to the left so the absolute market lows of March 2009, match the time of the absolute market low in the Shanghai Index in October 2008. This type of time shifted display clearly shows which market is a leader and which markets are followers.

This chart display confirms that 2009 has seen the most profound change in market dynamics in more than half a century. Put simply, China leads and the DOW follows.

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  Wednesday, 14 Oct 2009 | 10:51 PM ET

How Far Will Asia Go? Look to Kospi, Not Dow

Posted By: Daryl Guppy

Looks like the wish on your Christmas list this year could be for the Dow to go beyond 10,000, following today's breakthrough. But we look at the charts to find out just how important the Dow's renewed strength is to Asian markets.

Clearly, the break above the 10K mark is an important psychological barrier. Still, it comes with a significant warning.

The chart shows that the strongest historical support is near 10200. This is the area that will provide the strongest resistance and cap any rise from 9,000. This feature is enough to put a damper on the euphoria.

What’s 200 points between friends? Quite a bit when it comes to trading methods.

When it comes to trading methods, 200 points makes a big difference. It’s the difference between a rally trade and a trend trade. The high resistance level at 10200 suggests we can see a short term rally towards this level followed by a retreat and retest of support in the area near 10,000. The ability to hold support near 10,000 will reveal itself if this is:

  • a trend consolidation
  • an excited bullish exhaustion pattern
  • or a genuine continuation of the trend.

The breakout above 10,000 is not a surprise to chartists because the Dow shows an inverted head and shoulder pattern and its most clearly seen on the weekly chart. The target level is 11,600, well above the initial 10,200 resistance level.

China

Trend continuation in the Dow will push markets higher. In Asia, China will add to this tailwind push. These reactions will affect Hong Kong, Korea and Singapore. Watch the Shanghai Composite Index, with its powerful trend consolidation continuation pattern. It is less probable that the Shanghai index will break above 3000 in the current trend rally, but a move towards upside targets near 3400 is developing as part of the Shanghai consolidation pattern.

Korea

The key leading index that sets the scene for Asia is the Kospi.

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  Tuesday, 13 Oct 2009 | 3:10 AM ET

Betting on Aussie Parity With Dollar? Don't Hold Your Breath

Posted By: Daryl Guppy

The Australian dollar has hit a 14-month high against the U.S dollar, prompting investors to speculate once again, if the currency will reach parity with the greenback. According to historical charts, that outcome is unlikely anytime soon.

The last time we issued an invitation to the Aussie dollar parity party in July 2008 the Aussie collapsed in surprise.

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  Wednesday, 7 Oct 2009 | 4:02 AM ET

Profiting from Kraft's Takeover Bid for Cadbury: Charts

Posted By: Daryl Guppy

US food giant Kraft has been in the spotlight in recent weeks following its $16 billion bid for British chocolate firm Cadbury. For investors holding the company's stock, should they buy, hold, or sell?

Takeovers are more about trading strategies rather than chart analysis. The takeover dance usually has 2 or 3 steps and sometimes more.

The dance starts with the offer from the predator to the target prey. This offer is routinely rejected as far below fair value which is decided by an independent valuation report commissioned by the prey.

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About Charting Asia with Daryl Guppy

  • Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia. He runs training, analysis and resource workshops for retail and professional financial market traders involved in stocks, CFDs, warrants, derivatives, futures and commodities in China, Malaysia, Singapore and Australia. He has his own trading company, guppytraders.com.

 

  • Daryl Guppy is an independent technical analyst who appears frequently on CNBC Asia.

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