My case for the Dow making another go at 12800

Today, I feature some Dow stocks as a crystal ball of sorts to portend the short-term to medium-term direction of the Dow Jones Industrial Average.

Technically, some of the strongest stocks in the Dow are:

GE:





















A long hammer-like candlestick eventuated from Friday's price action, which ricocheted off the 200-day MA, and could also represent a 38.2% Fibronacci retracement of the recent $33.9 to $36.0 rally.

AIG:




















AIG sees a doji at the major support area of $67, which, together with the potential triangular wedge pattern formed since end-Feb '07, could signal an imminent rebound to at least $70.The stock held above the 200-day MA so the future trend looks to be up.

Home Depot:




















HD's stock shows clear bullish divergences in all three major indicators used, and exhibits a doji Friday to boot. If I had a US trading account, I would buy HD IMMEDIATELY!


INTEL:





















Intel stock shows classic bullish divergence in its RSI, as well aas minor divergences in MACD and Stochastios. My target is at least $19.90 in the next week or so, at or close to the 200-day MA.


Johnson & Johnson:




















JNJ has a similar technical pattern to INTC and the recent high volume seems to indicate the passing of ownership from one set of strong hands to another.

And one stock which looks set to make new 52-week highs is AT&T:
































The tech giants look OK-

Microsoft:























The main gauge of Bill Gate's vast wealth looks to have successfully tested the 200-day MA. Moreover, an ascending triangle formation seems to have materialised in the chart.


On the flip side, some weak Dowdies:

Boeing:




















Technically, BA may be setting itself up for a Lockerbie style drop with high-volume down days and a breach of the 50-day MA. MACD and Stochastics have also crossed down.


Exxon Mobil:

























This oily giant seems to have reached a temporary top, with a bearish-engulfing candlestick pattern.


If you want more detailed analysis, predictions and suggested trades on the SGX and Bursa Malaysia, join my clientele, each of whom pays a one-off RM500(or S$200) for twice a week trading updates by e-mail.

Some long, balanced by some short positions...

New long positions: LKT(22/03) - up 3.4%
Megan(14/03)- up 6.8%
Satang(15/03)- flat
Hengxin(19/03)-down 1.0%
OSIM(19/03) - up 0.5%
CMBeCW071029 - flat
Creative(19/03)- flat

Balanced by puts: DBSePW070910@5.5c
KepCePW070710@8c
STIePW070628@30.5c

Some charts and observations for next week and beyond:

The Dow looks on track for a new high or at least to scrape the same 12800 ceiling within the next month:




















The STI also looks to have built up a base for a second assault of 2300:
















Stocks I'm eyeing to increase positions in next week:DMX has a bullish divergence buy signal, and a high volume spurt last Thursday that will potentially trigger the rise up to a possible top at close to 80c.





























Hengxin looks promising, as it seems to have built a solid base for a rise back up to 75c.

















Longcheer seems to have started it's run to retrace it's first Fibronacci target of 84-85c.















China Merchants Bank seems to have built a solid foundation for a re-test of the HK$17.00 level so a punt on it's call- warrants might be a good short to medium-term bet:


































Jurong Tech has fallen frightfully, and looks set for a short-term rebound, perhaps to its support-turned-resistance of 92c, but longer term, a H&S pattern could be developing:


































In Malaysia, I'm betting on Satangjaya:

Buying selectively.

Entered Redtone @ 73.5c, newly-listed call-warrants BJToto-CB@50c and TM-CD@0.53c.

Airport rose 6.4% today.

Just committed 2.6% of my Malaysian portfolio to Redtone today, and by 5pm, was elated to see it soar by 24.3%

The Dow rises 157, holding out hope for more gains.

A double bottom has shown itself on the 5-day chart. Take note!























Trading update: Sold yesterday's purchase of MAA for a 7.2% gain, NSCOM for a 6.9% gain, Berjaya Cap for a 5.5% profit, and the rest of my Bursa-CB for a 21% gain over 2 days. Sold Longcheer for a 7.3% return.

In support of my prediction for the Dow's rise tonight...

1. Many Dow stocks are oversold, as indicated by their RSIs falling below 30, including two of the biggies, General Electric and General Motors:




















A sampling of the others:
Exxon Mobil:
















IBM aka Big Blue:



















Microsoft:


















Citigroup:

















Altria:




















Pfizer:















Home Depot:
















Verizon:



















2. Most Asian stock indices show buy signals:























3. The unravelling of Yen carry trades, which have been blamed for most of the current turmoil, seem to be abating, with the yen surge over the past few days looking to retrace heavily.



















I am euphoric today, as I had punted heavily on the call-warrants of Malaysian blue-chip companies,namely Telekom Malaysia, YTL, and just yesterday, Maybank and Bursa Malaysia, hoping for a short profit, only to see massive paper losses as at yesterday's force-selling induced closing prices.

Today, I had a ball, as all these warrants(and others) surged:


Bursa -CB rocketed 47.6% and I pared off three-quarters of yesterdays purchases for a profit;

Maybank -CC surged 35.5% and I sold all I had bought yesterday for a bigger profit;

TM-CC forged ahead 32.3% and I also disposed of all my purchases yesterday, the smallest gain among the four;

Lastly, YTL-CA went ballistic, up by 72.7% and I sold all my 31,000 contra shares for a sizeable profit.

All in all, I cleared RM28 000 of contra positions in my margin account.

In Singapore, I entered Hengxin at 53c and Longcheer at 61.5c.

I'm totally shell-shocked!

But I console myself by totalling the differences between today's sharply reduced prices and the prices at which I sold the stocks earlier this year.

There are a total of 45 stocks involved and in total,the value I 'gained' from the difference amounts to RM24 328, or about 16% of my Malaysian portfolio value at the peak.

Nibbling at big discounts.

Bought Bursa CA at 93c and 88c(-23c or 21%). Bought YTL-CA at 43c(-11.5c or 19%).

Crystal ball gazing for next week?

Yaan reported a great set of earnings. At Friday's closing price of 0.205, it has a PE ratio of close to 5.

However some substantial shareholders(spoil sports!) are selling.

















Technically, it still looks quite strong however.






















The slump in some covered warrants last week(of which only a few are shown below) is blood-curdling.














Some that I'm punting on next week if they drop another 30% or more in two days or less:

Promising outlook, but nothing's writ in stone.

With the jittery environment we have today, markets turn at the slightest hedge fund manager's whim.

But the Dow technical chart as of last night looks promising:














A candlestick hammer has appeared with a long tail resulting from the opening drop of 200 points(scary!).

The tail has rebounded off last October's consolidation area so there is a 65-35 chance of a strong rebound on the cards.

Buy selectively on oversold counters!

Oh well...

It didn't work out as expected. Ouhua and Star Cruises actually advanced 6.5% and 9.3% respectively before losing all their gains. However, there was one stock in which I was able to capture all the gains, namely China Aviation Oil.

I sold it for S$1.16, a 12.6% gross return over a week.

On Bursa Malaysia, I sold Utusan for a 4.9% gain since yesterday, as it turned out to be one of a minority of gainers today.


No new positions entered today.