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Saturday, December 23, 2017

Index Weekly Wrap for the Week of Dec 22

It was the 2nd last week for the year 2017, US stocks continue hitting new highs and new highs.

In my opinion, the uptrend in US stocks has come to the so-called "Excess Phase" of primary trend according to Dow Theory, which states that there are three phases to every primary trend – the accumulation phase (distribution phase), the public participation phase and a panic phase (excess phase). Read more: Dow Theory: The Three Phases Of Primary Trends. The Excess Phase is the final phase of three, so let's be prepared for it when it gets bent next year.

Asia stock markets on the other hand look quite different from the US, HSI still in the first phase and goes into 2nd, i.e from accumulation move into public participation. It just passed through three year high, made a retest and just got rebounded this week from 28512 level, poised to move higher in coming weeks. The Shanghai index rebounded finally after 5 weeks decline, right at its uptrend channel bottom support level, which looks good and this will also provide positive spillover momentum to HSI. The SSE is lagging behind all the major indexes and in the 1st phase-accumulation phase.

STI was in 3rd week of retracement, and resisted by its upper trend channel line as can be seen in below weekly chart. I consider it a health retracement as long it can hold above 3365 support level, but if it goes below this level, then it's possible it will further retrace down to its uptrend channel bottom line.

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