ASEAN Strategy : Alpha Edge - turning point in 1Q16?


■ S&P500’s uptrend is still intact. 1,850pts is the key support level.

■ Dollar Index should peak in 1Q16 and trade sideways in 2016.

■ Crude oil prices should also bottom, in line with the likely Dollar Index US$ peak in 1Q16.

■ Gold prices showing potential bullish wedge formation. Prices should bottom soon.

Asia’s equity market is still in a rebound phase but could see new lows in 1Q16 before it finally bottoms.

S&P500 still in uptrend
S&P500’s rally last Friday tells us that the immediate-term trend is upward for US equity markets. A weekly RSI breakout above the resistance trendline should be a mediumterm bullish sign for the S&P500. A key long-term support is at 1,850-1,860 levels.

Dollar Index peak in 1Q16?
We are looking for the Dollar Index to peak sometime in 1Q16. If we are right, this should be followed by sideways consolidation for 6-12 months. Crude oil prices should bottom sometime in 1Q16.

Real time Gold Prices (Showing in China Beijing Timing)
Gold in bullish wedge formation?
Gold’s weekly chart is showing the formation of a potential bullish declining wedge since end-2014. Prices could see a little more downside first but we are close to a major bottom. Weekly MACD and RSI are showing potential positive divergence signs.

One more downleg for Asia in 1Q16?
The MSCI Asia ex-Japan Index (MAxJ) should see another leg down after completing an ‘a-b-c’ wave rebound since the recent Oct bottom. This will be in line with our wavecount for the Dollar Index peaking in 1Q16. Singapore’s STI and Indonesia’s Jakarta Composite wavecounts are similar to the MaxJ’s.

Malaysia’s FBM Small-Cap still looking positive
The FBM Small-Cap Index is facing resistance at the 40-week SMA (15,747) and it is possible the index will test the resistance-turned-support trendline at 14,800-14,900 levels over the next few months. The MACD and RSI resistance trendline breakouts are medium-term bullish. (Read Report)

Source : CIMB Research

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