Alpha Edge - Rebound is in progress


■ US and Asia’s 1-2 months equity market rebound is already in progress. Oct and Nov should be positive months.

■ US bond yield eased over the past few weeks, but our long-term uptrend view is unchanged.

Singapore’s STI and Indonesia’s Jakarta Composite wave counts are clear. Immediate-term rebound is still in progress.

Malaysia’s FBM Small Cap Index is facing a major resistance trendline, and might need to rebuild its support base first before challenging this resistance.

Oct and Nov rebound months?
We were looking for global equity markets to rebound in Oct and Nov and, so far, the markets are behaving in this manner. The S&P 500 has already completed the five wave down-leg (with a failed wave v at 1,871) in Sep and the “a-b-c” rebound has already started. However, DJIA’s wave count looks like the Index is still completing its wave iv rebound.

Dollar consolidate for now
The Dollar Index continues to show signs of consolidation, and an indication minor wave 4 is still in progress. The Index could see more weakness and retest the recent low in the coming weeks. However, the Dollar long-term uptrend continues.

Long-term US bond yields trend is up
The US 10-years government bond yields eased back over the past few but this has not changed our long-term bullish view on the yields. Yields could consolidate over the next few weeks before the next up-leg starts.

STI and JCI wave counts are clear
Singapore’s STI and Indonesia’s JCI wave count are clear. We see a five wave downleg completed in end-Sep and its wave “a-b-c” rebound is in progress. The Index up-leg should last for a few more weeks before the next major down-leg kicks in.

FBM Small Cap face resistance
Malaysia’s FBM Small Cap Index is facing a major resistance trendline at the 15,400 levels. The weekly RSI has already overcome its resistance trendline, which is mediumterm bullish. If the FBMSC is going to take out this trendline, the Index might need to build its support base at current price levels first before making an attempt to break that resistance trendline. (Read Report)

Source : CIMB Research

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