Alpha Edge - still in rebound phase?


■ Asia equity markets remain in rebound phase. Hopefully, Nov will be an up month.

■ Dollar Index trend still sideways unless the index can overcome its resistance trendline at 97.5pts.

■ US S&P500 and DJIA weekly charts are holding above their major support trendlines, which is medium-term positive.

Still unclear if US equity markets have started bear phase or if long-term uptrend is still intact.

MAxJ still in rebound phase?
The MSCI Asia ex-Japan Index (MAxJ) has been in a rebound phase for the past one month and, if we are right, the MAxJ could see a little more downside over the next week or so, followed by another leg up, to complete the rebound.

STI wavecount similar to MAxJ’s alternative wavecount?
Our alternative wavecount for Singapore’s STI is similar to MAxJ’s. However, it does not make much difference which wavecount STI is in. Either way, the STI is looking for another downleg once the rebound ends.

Shanghai in uptrend channel consolidation
China’s Shanghai Composite Index has been trading sideways in an uptrend channel and this pattern looks just like a rebound. A break below the channel support trendline should mean the next downleg has started.

Long-term support trendline holding for S&P500
Both the S&P500 and the DJIA weekly charts show both indices recently testing the major support trendlines since 2009, which is medium-term positive for them. The long term outlook is mixed.

Dollar Index sideways?
Unless the Dollar Index can overcome the major resistance trendline at 97.5pts, the index will remain in its consolidation phase. However, weekly technical indicators are turning positive. US 10-year government bond yields have been consolidating over the past few months in a downtrend channel. A breakout above the channel resistance trendline at 2.18% will be medium-term positive. (Read Report)

Source : CIMB Research

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