MONTREAL - Asia failed to recover this week from huge Monday losses and ended
down strongly nearly all across the board. Across the nine national indices
covered here, the median loss and the arithmetic average were almost identical,
off 3.7%. The MSCI Asia Pacific and ex-Japan indices plummeted on Monday and
recovered a bit on Friday, ending the week down respectively 3.1% to 110.65 and
3.6% to 354.15.
Many patterns from last week continued and some were accentuated. The three
Greater China indices, for example, continued to be among the most volatile and
most heavily down. Taiwan, Shanghai and Hong Kong were the three biggest
losers
on the week, in that order, while they were three of the five most volatile,
Shanghai taking the honors in that category.
The Shanghai Stock Exchange Composite (SSEC) was the most schizophrenic of the
lot, opening near its high and closing near its low on Monday and Wednesday but
opening near its low and closing near its high on Tuesday and Thursday.
On Friday, in mid-afternoon local time, the SSEC was down 3.8% on the week at
2,932 up from a Wednesday intraday low of 2,761, closing only a little stronger
at 2,960, but still a bit unsteady with conflicting expert explanations for the
behavior. From a chart perspective, the significant element is that it is
testing its support against a local maximum from July-August 2008, inherited
from a structure from the first quarter of 2007. Despite the recovery late in
the week, neither short-term nor medium-term technical indicators are
favorable.
The Taiwan Stock Exchange Composite (TSEC) was down every day of the week to
end off 5.9% at 6,657, following my assessment earlier this week that it might
"possibly retrac[e] as far as 6,600 or lower before stabilizing around 7,000".
The intraday low on Friday was 6,630. (See
Taiwan counts typhoon cost, Asia Times Online, August 19, 2009.)
The Hang Seng in Hong Kong had much greater than usual volatility, and tied
with the TSEC for highest intraday volatility on the week, both well behind the
SSEC. The Hang Seng closed at 20,270, down around 3% since the previous
Friday's close but on a strong intraday upswing. The range from 19,000 to
20,500 is a key level that it occupied from October 2006 through May 2007, and
its significance was confirmed in March and again in July 2008. It may well
brake the index's advance from the 12,000-level only five and a half months
ago. Indeed, insofar as the index is down from almost 21,000 just 10 days ago,
it may already have done so.
Singapore and Mumbai continued, as last week, to be two of the four most
volatile indices but two of the four best performers (or least losers). The
Straits Times Index followed Shanghai's up-down-up-down schizophrenia and was
off about 3.2% on the week by the Friday close at 2,547, confirming its support
at the 2,500 level with its lowest intraday low at 2,521 on Wednesday. As I
pointed out last week. the Singapore index is "trying to confirm its breakout
to the upside through the significant 2,500 resistance level (early 1994, early
1996, late 1999, early 2000, summer 2005, and autumn 2008)" without retracing
to its "short-term support at 2,400 that is the top of its trading range (which
extends down to 2,100)". (See
Earnings hopes high, Asia Times Online, August 15, 2009.)
In Mumbai, the BSE Sensex 30 continues (again citing last week's column) "being
protected from having to challenge its medium-term 13,400 support level by a
long-term support ledge in the 14,700-15,250 interval". Its intraday low this
week came on Wednesday at 14,684, and at Friday midday local time it finds
itself crossing 15,000 following an uptrend that began at market open.
Technical indicators have been turning more positive as the week goes on but
not yet definitive, and there is a resistance at 15,600 that runs terraced up
to 16,000.
Also like last week, the Australasian and Northeast Asia exchanges were both
the least volatile and the smallest losers. Finally, the Nikkei 225 in Tokyo
and the KOSPI in Seoul were two of the three least volatile and two of the four
least losers on the week. Tokyo was down the average 3.7% to 10,238, but the
KOSPI bucked the general trend to lose only 0.7% to 1,581, with its Tuesday
intraday low for the week at 1,530 significantly holding against the support at
1,525 from July-August last year.
The one exception this week to last week's pattern in the Australasian and
Northeast Asian theaters was the New Zealand 50 Index Gross (NZX-50), down 3.6%
to 3,035, retracing last week's irrational exuberance that saw it gain 2.7% on
top of the previous week's 1.8% rise, and bringing it back down possibly to
test in the near future its support near 2,900 from last October, tentatively
confirmed this past May.
The Australia All Ordinaries Index followed the general trend, closing down
3.6% on the week to 4,306, making ready to test its support from last October,
correlative to the aforementioned NZX chart, at 4,275. Contrary to New Zealand,
however, the Australian index did not have a confirmation of that level this
past spring; and its next possible support is in the 3,950-4,050 range.
Dr Robert M Cutler(http://www.robertcutler.org), educated at the
Massachusetts Institute of Technology and the University of Michigan, has
researched and taught at universities in the United States, Canada, France,
Switzerland and Russia. Now senior research fellow in the Institute of
European, Russian and Eurasian Studies, Carleton University, Canada, he also
consults privately in a variety of fields.
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