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渐飞研究报告 - http://bg.panlv.net Technical Analysis LONG WAVE Outlook Macro March 2012 Tidal shifts James Bond, Golf & the Stock Market: An Introduction to Socionomics Long-Term Technical Analysis Trades Short JPY Basket Short GBP Basket Short S&P 500, Long Taiwan TAIEX Disclosures and Disclaimer This report must be read with the disclosures and analyst certiﬁcations in the Disclosure appendix, and with the Disclaimer, which forms part of it 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Summary 2012 should see an acceleration of the generational mood change that started in 2000. Twelve years ago the era of credit creation and inflated asset markets in the developed world came to an end and the forces of deflation took over. This becomes clear when we measure stock markets in real money terms, gold, rather than fiat money. On that measure, developed markets are down over 80% in this period (as our chart of the US stock market demonstrates on page 28). Negative social mood (Socionomics) should continue to drive the developed markets. In the year in which the James Bond franchise sees its latest release with Skyfall, we introduce this new social science with a look at how a social mood cycle affects such diverse aspects as movie popularity, golf, attitudes to death and the stock market. (See page 5). According to our technical analysis, Asian stock markets should hold up relatively well and vastly outperform. Some Asian stock markets are in secular bull cycles, particularly Taiwan (page 24), India (page 22) and Korea (page 18). Asian currencies on the other hand, although in a long-term bull market, should depreciate versus the US dollar in 2012 (as our chart of the Singapore Dollar shows on page 21). The US dollar outperformance will also be seen against G10 currencies over the course of the next few months although the very long term trend is still down. Despite all the negative news, the euro should survive its next leg lower and come back an even stronger currency (see our chart of the euro trade- weighted index on page 41). This year’s deflationary lurch should surprise everybody by hurting gold and a move lower like the one we saw in 1975 to 1976 seems likely before the real bubble phase gets going (see charts on pages 54 and 55). Commodities in general should remain under pressure after a classic Socionomic peak mood indicator (a high profile initial public offering) nailed the top of the asset class rally in 2011 (page 56). Bond yields have a mixed outlook, but the clearest message comes from Japan where a very long-term bottom in JGB yields is playing out (see page 17). Credit markets should remain out of favour with CDS Indices ready for the next wave higher (see page 42). 1 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Long-Term Technical Analysis Trades Short Yen Basket Short JPY equally weighted versus USD, EUR and SGD. Stop loss of 5% basket move. Target of 15%. Short GBP Basket Short GBP equally weighted versus USD and EUR. Stop loss of 5% basket move. Target of 15%. Short S&P 500, Long Taiwan Short Dec 12 S&P 500 future at 1350. Long HSBC MSCI Taiwan ETF at HKD 43.8. Equally weighted. Stop loss of 5% spread move. Target of 20%. 2 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Contents James Bond, Golf & Stocks 4 Middle East 51 An Introduction to Socionomics 4 Africa 53 China / Hong Kong 12 Metals & Commodities 55 Japan 14 Our technical analysis Korea 16 methodology 58 Singapore 18 Disclosure appendix 63 India 20 Disclaimer 64 Emerging Asia 22 Australia 24 United States of America 26 Canada 31 Latin America 33 Eurozone 38 United Kingdom 43 Scandinavia 47 Russia 49 3 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 James Bond, Golf & Stocks An Introduction to Socionomics For instance, in the example above a Socionomic commentary would instead read: “Better-than- Question: What have Tiger Woods, zombies, expected GDP numbers confirm positive social James Bond movies and the length of women’s mood”. Socionomists (so-shee-onomists) think in hemlines got in common? reverse to the orthodox. An orthodox economist Answer: They are all Socionomic indicators linked might say: “The recession is causing business to the stock market. people to be cautious”. A Socionomist would say: “Cautious business people are causing Socionomics is a new social science, pioneered by the recession”. Robert Prechter Jr, that has sprung out of the field of technical analysis, in particular the Elliott It is this different view of causality that makes Wave Principle. Socionomics different. It alludes to the herding nature of society and why social mood therefore Most people take the orthodox, ‘fundamental’ moves between positive and negative in a structured, view and assume that events and news drive regular fashion. But most people, being unaware that sentiment and markets. Society is conditioned to they are part of the social crowd, are oblivious to this accept this way of thinking because of our underlying tide and carry on thinking that, for relentless need to rationalise ‘why’ markets have example, people are protesting on the streets because moved. “Stock markets went up today because of the economy/market is down. They are not. The better than expected GDP numbers” is a standard economy/market is down because of the underlying orthodox commentary on markets. This view negative social mood, of which social unrest is assumes that market sentiment or mood is a merely a manifestation. function of what the news is. Once you accept the validity of Prechter’s But Socionomics takes a different view. Socionomic theory you start to view news and Socionomics takes the opposite view that it is instead events in a very different way. Rather than ask “what the mass mood of a society (social mood) that the news is” you start to ask “why is this news drives markets, social trends and, therefore, the happening now?” news. Furthermore and crucially, social mood is Robert Prechter Jr has been the pioneer in patterned according to the Elliott Wave developing Socionomics, and his 1999 book The Principle. Thus, the stock market is a Wave Principle of Human Social Behaviour and measurement of social mood. This makes social the New Science of Socionomics is a seminal work. mood not only highly predictable but also means that It rigorously examines many examples of manifestations and measures of social mood can act socionomic manifestations, but for the sake of our as sentiment confirmation of where markets are in the wave cycle. 4 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 brief introduction to the subject we will only 1989, but social mood had already begun to bottom highlight a few here. out and the positive social mood of the 1990s was manifest in a revival in Bond’s popularity. The “No Mr Bond…I expect you to die!” decline in social mood over the last 11 years has One of the central tenets of Prechter’s Socionomic meant Bond no longer appeals the way he once did theory is that bear markets are driven by feelings as mood turns away from testosterone-fuelled involving empathy, caring and nurturing in a general endeavours. The next movie, Skyfall, is scheduled social mood of unhappiness. Bull markets, on the for release later in 2012. Given the continued other hand are driven by a psychology of selfishness, downtrend in social mood, we think it is aggression and competitiveness. appropriately titled. And so it might fit that James Bond, the icon of male chauvinism, action-hero and all-round playboy, should be a Socionomic indicator. The chart below shows the Dow Jones Industrials index versus the James Bond movie franchise film earnings, both in gold terms. The peak in movie earnings was Thunderball in 1964 which coincided with the peak in social mood as measured by the stock market. The low point was Licence To Kill in Figure 1: James Bond Film Earnings (RHS) versus Dow Industrials [LHS] Source: HSBC, Bloomberg, www.the-numbers.com, shutterstock.com 5 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 The hemline indicator This reflection of liberal versus conservative fashion Credited to George Taylor in 1926 (and later is replicated across society in general. Positive social developed by Ralph Rotnem), this famous mood engenders liberal feelings and attitudes Socionomic indicator notes the relationship between towards politics and international relations. Politics the stock market and the length of hemlines. In free become very centralised and consensus-oriented in societies, hemlines tend to get shorter and shorter as bull markets, whereas negative social mood causes the social mood becomes ever more positive and fractures in society and drives people to the extreme they lengthen as social mood becomes negative. left and right of politics. This fracturing in social mood can lead to movements springing up from In Europe and the US, positive social mood was grass roots (such as the Tea Party in the US) and also reflected in the 1920s flappers, the 1960s mini and general social unrest. the 1990s micro-mini whereas negative social mood was reflected in the 1930s cross cuts and the 1970s caftans. Given that social mood has been declining relentlessly since 2000 it should be unsurprising that the spring/summer 2012 fashion collections of designers such as Zoe Jordan, Caroline Herrara and Max Azria feature long hemlines. Figure 2: Social Mood & Hemlines Source: HSBC, Bloomberg, shutterstock.com 6 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 War & peace Take the recent example in Australia where the 2007 Periods of unity, togetherness and apology for past top in social mood was crested with an historic mistakes tend to occur after a time of positive social apology to the indigenous aboriginal people for past mood whereas conflict and wars tend to occur after mistreatment. social mood has turned down. The Socionomic Reconciliations such as this generally occur after a explanation for this is that it is not wars that make period of prosperity and signal a peak in social mood people angry; it is angry people that make war. (ie: the stock market). Figure 4 on the next page shows that both major conflicts of last century occurred after a period negative social mood. By the same token, peace and reconciliation do not make people content. Contented people engage in peace and reconciliation. There have been many examples of this manifestation of positive social mood over the super-cycle degree top in developed markets during the last 20 years. From the European Union project to the British apologies over its empire, the decades long bull cycle in social mood led to societies feeling confident enough to come together and atone for the past. Figure 3: Australian Social Mood Source: HSBC, Bloomberg, Updata 7 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 The Tiger Woods effect So we should expect the popularity of golf to wax There is a general relationship between the and wane with the stock market as social mood popularity of sport and leisure and the stock market. cycles through its stages. Positive social mood makes people want to get out The chart below shows the inflation adjusted UK and exercise. Watching others doing the same in a stock market and the inflation adjusted winners prize harsh competitive environment captures the spirit of for the British Open golf championship since 1865. a bull market. Sporting attendances (and the players’ Given the historical lack of sponsorship for the Open salaries) rise and fall with social mood. (it is run by the Royal and Ancient Golf Club of But perhaps more than any other sport or pastime, it St Andrews) we can think of the prize fund as a is golf that encapsulates the essence of social mood. reflection of the popularity in the grass roots of the Traditionally snobby and elitist, having the time to game of golf. It can be used as a proxy for golf club engage in such a time consuming pastime is seen, membership numbers. rightly or wrongly, as a badge of prosperity. Figure 4: UK Social Mood Source: HSBC, finfacts.com, safalra.com, wikipedia.com, shutterstock.com Figure 5: Japanese Social Mood Source: HSBC, Bloomberg, Updata 8 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 We can see that periods of positive social mood are how the chronic underperformance of Callaway reflected in an increased prize (increased popularity has coincided with the bear market over the last in golf) and periods of negative social mood are ten years. reflected in a stagnation in golf’s popularity. In fact the popularity of golf has been on the wane This relationship between golf and the stock for many years and we can highlight this by market can also be seen in the relative examining another Socionomic phenomenon: heroes performance of golf stocks. of bull markets become villains of bear markets. Tiger Woods has been the iconic image of golf since Figure 5 shows the Japanese Nikkei Index versus the mid to late 1990s and he is generally thought to Resort Solutions Co, which manages golf resorts and have played his best, and some say the best they leisure parks. Notice how the bubble in the mid to have ever seen, in 2000 when he won the US Open late 1980s coincided with a massive outperformance by ten shots. Since then Woods has gone on to win of golf and leisure. The peak of the bubble was many more major championships, but his popularity marked by the sale of Pebble Beach links, the iconic (and some say his form) has never really been the jewel in the crown of American golf, to the same since. The decline in his form has accelerated Japanese. This is interesting because arrogance and in recent years with well-publicised off-course hubris are major emotions at the end of bull markets problems contributing to his declining popularity. when those involved think that they can do no When social mood turns negative the icons of the wrong. Witness the battle for ABN Amro bank at the previous good times get panned, whether they are top of the credit bubble in 2007. Alan Greenspan, the former Fed “maestro”, who Figure 6 shows the relationship between the US could do no wrong but who is now vilified by many, stock market and the stock of a leading golf the banking sector, which was seen to be central to company, Callaway. Callaway’s outperformance the apparent economic “success” during the credit topped out before the general stock market and bubble is now about the most despised profession on thus gave an early warning signal that in the late the planet, or Tiger Woods. 1990’s underlying social mood was weakening as the general market made its bubble top. Notice Figure 6: United States Social Mood Source: HSBC, Bloomberg, Updata 9 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Figure 7: UK Social Mood Source: HSBC, Bloomberg, Updata, shutterstock.com The popularity of death When people are so pessimistic that there is an As social mood cycles through its ups and downs, increasing interest in planning for one’s own demise, attitudes to death change. Bull markets are driven it’s a good Socionomic indication that the sentiment by a psychology of passion for life and optimism cycle is very dark. whereas bear markets are driven by pessimism In fact, this Socionomic phenomena also shows up and feelings that life is pointless. in movie genres. Periods of positive social mood Every so often national debates about euthanasia engender feelings of life and vivaciousness – soft, come up and they coincide with bear markets. family oriented Disney-style films tend to be Witness the increase in debate in the UK over recent popular in these times. When social mood turns years over the right to kill yourself, which have down, horror and dark genre movies become coincided with an 11-year bear market in real terms. popular. In the early 1930s as social mood plummeted there was a plethora of horror movies This relationship also shows up in the chart above produced that proved to be extremely popular, which shows a listed stock in funeral services against including Dracula, Frankenstein, Jekyll & Hyde the British stock market. The red line is the inverted and The Mummy. Readers of a certain age will relative performance of Dignity PLC, which provide remember the popular horror movies of the 1970s undertaking and funeral planning services, and so as bear market in social mood (including vampire the red line is going down the stock is outperforming movies, The Texas Chain Saw Massacre and the market. Halloween) and younger readers will no doubt be We can see clearly that when social mood is well aware how popular vampires (Twilight, True negative (declining stock market) funeral services Blood) and zombies (Zombieland) have become in outperform and vice versa. recent years. World War Z, a zombie film exploring themes of survival and uncertainty, and starring 10 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 ‘Hollywood royalty’ Brad Pitt is due for release at For now though, this brief introduction to the end of 2012. Oh yes, just in time for the end of Socionomics has hopefully given you a flavour of the world as predicted by the Mayan calendar. how thinking differently from the crowd can give us insights into where we are in the economic cycle. The way things are shaping up, social mood in 2012 is turning black. For much more information on Prechter’s Socionomic theory, the Socionomic Institute at Which means that, on a positive note, the bear www.socionimics.net is a comprehensive resource. market will at least be nearer the end than the beginning. There are many more Socionomic manifestations of the swings between positive and negative social mood and we allude to some in the remainder of this document. 11 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 China / Hong Kong Sideways should outperform the West Positive sentiment growing China and Hong Kong should outperform to an Intermediate degree wave (B) low around developed markets in the years ahead. current levels, it adds evidence to a slightly bullish scenario for China in 2012. We must, however, be Amid the growing concern over a ‘China bubble’ cognisant of the bearish alternative count which we see little evidence for this in stock market gains probability on a break below the December data. From an Elliott Wave perspective the bubble 2011 lows (see Chart 1). phase was the final fifth wave of the Cycle degree wave III between 2005 and 2007. The correction The Hang Seng index has a similar structure that lower from that high is not over yet and will points to an upward phase over the next few probably last a few more years as a sideways months followed by another downturn to Cycle wave IV plays out. complete the correction from 2007. And one Socionomic indicator that pointed to the October The bubble sentiment manifested in the rising low in the Hang Seng was the measurement of premium of onshore A shares over offshore H extreme negative social mood using the relative shares, with the premium then collapsing into 2010. performance of Macau casinos (see Chart 3). The premium did have a spurt higher in late 2011, but is now back to levels of more balanced sentiment. Given that the current wave cycle points Chart 1: Shanghai A Share Index Source: HSBC, Bloomberg, Updata 12 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: Hang Seng Index Source: HSBC, Bloomberg, Updata Chart 3: Socionomics Source: HSBC, Bloomberg, Updata 13 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Japan Entering the end game for the 22-year old bear market JPY and JGB offer trades of the decade If you have started to read this section you are new long-term bull market to start. Very long- probably in the minority. After a 22-year long term investors would be wise to start thinking bear market, global investors don’t seem to care about Japan over the next couple of years. that much about Japanese markets. But this is In fact, the currency and bond markets are both precisely the sentiment conditions required for a pointing to significant reversals in the months lasting low to be put in. Complete apathy about ahead. USD-JPY has scope for a marginal new low the stock market is a Socionomic sign that social below 70 but the long-term cycle is higher towards mood is near a cycle low (watch for financial 130 and beyond. There is an interesting reductive news television channels in the West going off air cycle pointing to 2013 as a potential low point. in coming years). And the JGB market also offers one of the trades Unfortunately though, the Nikkei has an Elliott of the decade with a very long-term reverse head Wave structure that suggests one more phase and shoulders pattern visible on the 10-year yield. down towards 5,000 to complete the bear. This A rise through 1.74% will be a key event. will no doubt convince absolutely everyone that Japan cannot be saved – ideal conditions for a Chart 1: Nikkei 225 Source: HSBC, Bloomberg, Updata 14 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: USD-JPY Source: HSBC, Bloomberg, Updata Chart 3: JGB 10-Year Yield Source: HSBC, Bloomberg, Updata 15 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Korea Positive polarity shift in social mood Bull market to last many years Social mood in Korea, as measured by the stock progress in Korea for 22 years. Future potential market, shows evidence that a generational remains very high. positive change has taken place. The Korean won should weaken versus the US The KOSPI index collapsed along with most other Dollar in 2012. The 1,277 level is very attainable markets in 2008, but what is really interesting from and given that the alternative wave count has a technical analysis point of view is that the Primary degree wave B (circled) ending at the support level it found corresponded to the previous 2011 low, a continued rise towards 1,600 cannot peaks in the market throughout the 1980s and be ruled out. 1990s. When old resistance becomes support it is a sure sign that the polarity of the market has A fall in the 10-year Onshore Swap Rate towards changed. In this case it signals that the long-term the old 3.26% low seems probable from a technical outlook for Korea is very positive indeed. perspective before a significant low is put in. In gold terms, the top in the KOSPI was way back in 1989! So, in real terms, there has been no net Chart 1: KOSPI Source: HSBC, Bloomberg, Updata 16 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: USD-KRW Source: HSBC, Bloomberg, Updata Chart 3: Korea 10-Year Onshore Swap Rate Source: HSBC, Bloomberg, Updata 17 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Singapore A cause for concern Singapore dollar to decline Perhaps the biggest worry for the ‘bullish Asia’ And one alternative count in Singapore presents a scenario is Singapore. strong case for a bigger bear in 2012. If the index rallied above 3,227 it would be the first sign of this The Straits Times Index displays a preferred long- bearish alternative being eliminated. Until that term wave structure that is bullish. However, happens though, we must be wary of the downside because Elliott Wave analysis recognises that all and a consolidation below 2,600 would be bearish. analysis is an exercise in probabilistic interpretation, there is always at least one As chart 2 shows, the Singapore dollar has alternative wave count that could be validated reversed from an area of long-term Phi / depending on how the market evolves. Rather Fibonacci based support after a clear five down than being a disadvantage to the analysis, this is structure from 2001. There is resistance around actually an advantage because it allows the the 2008 low of 1.3451 and at the 1.4300 trendline analyst to eliminate the possible and concentrate but the market does have potential to reverse as on the probable as prices evolve. high as 1.5580. Chart 1: Straits Times Index Source: HSBC, Bloomberg, Updata 18 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: USD-SGD Source: HSBC, Bloomberg, Updata 19 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 India Secular bull market The long-term Elliott Wave cycle for India points Cycle wave II was a sideways affair into 2001 and to a market and social mood that is in a secular so India is now in a cycle degree wave III bull bull market that will last a generation. market in social mood. Expect this to last a generation and for the SENSEX to be many Chart 1 shows that Cycle degree wave I in the hundreds of percent higher in the years to come. SENSEX ended in the early 1990s with the fifth wave of that cycle degree categorised by the Notice how the market found support in 2008 at Harshad Mehta bubble. Mehta was an Indian an old resistance line – a bullish shift in polarity. stockbroker who was alleged to have been involved From a current Socionomic point of view, with engineering a fraudulent rise in the stock although issues remain, the recent thawing in market, and scandals such as this are typical of relations between India and Pakistan are also ending fifth waves. Enron and Bernie Madoff are consistent with a developing positive social mood. just two more recent Socionomic examples of how the last vestiges of a large bull cycle bring out As for the currency, the Indian rupee is bottoming villainous behaviour in sections of the market crowd. out versus the USD (high in USD-INR). The Chart 1: SENSEX Source: HSBC, Bloomberg, Updata 20 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: USD-INR Source: HSBC, Bloomberg, Updata ending diagonal (identified by us in our Wave Principle Letter in August 2011) has led to a rapid rise in price that probably completes the up cycle from 2007. There is an alternative count that would see USD-INR move sideways to slightly higher over the next few years in an even bigger bearish ending diagonal but it is a lower probability. 21 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Emerging Asia Taiwan social mood set to soar higher Frontier markets fail to confirm a broad bull market One of the most reliable of all the patterns that Indonesia also has a very bullish long-term make up Elliott’s Wave Principle is the triangle. outlook, but requires another leg down to Taiwan has been in a Cycle degree wave IV complete Intermediate degree wave (2) of Primary triangle formation since the 1989 high and is very wave 3 (circle). close to breaking out into a bullish fifth wave bull We still have to be selective in Asian markets market lasting many years. though. Chart 3 shows that an index of some Notice how the monthly Relative Strength Index, Frontier markets failed to confirm the new highs which we can use as a measure of sentiment, was in Asia APEX 50 in the middle of 2011 and until actually lower in wave E (circled) of the triangle both indices start to make new highs together than in wave C, even though the price level of wave again we cannot talk of a region-wide bull market. E was above wave C. Sentiment was signalling a climactic low at that point and since then the market has rallied in wave (1) of a new bull phase. Wave (2) is in the process of completing and will usher in a very strong positive phase in social mood. Chart 1: Taiwan TAIEX Source: HSBC, Bloomberg, Updata 22 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: Jakarta Composite Source: HSBC, Bloomberg, Updata Chart 3: Asian Frontiers versus MSCI APEX 50 Source: HSBC, Bloomberg, Updata 23 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Australia Schizophrenic social mood Australian society has changed a lot in recent The All Ordinaries index crash between 2007 and years with the country having more of an Asian- 2009 was the first wave, wave A (circled), of a centric outlook. multi-year correction and it looks like wave B peaked out in 2011. The market is now in wave C This is important for technical analysts and lower towards 3,000 and below. If the market rose Socionomists because measurements of social above 5,069 it would be the first sign that the mood are important sentiment indicators. more bullish alternative wave count (labelled as “Australia benefits from an Asian bull market so alt on the chart) was coming into play. the stock market / economy should look all right” is an oft-quoted mantra. Whether that is true or not The Australian dollar reversed in 2011 at a major Phi we will leave to the economists. All we know as / Fibonacci resistance zone and, unless AUD-USD technical analysts is that the price structure of the rallies above 1.0754, the probabilities point to a stock market gives a lead indicator of what path the long-term decline towards 0.80 in the first instance. economy goes down. And the Australian stock The Australian Government 10-year bond yield is market has more of a Western market structure to it at risk of reversing higher in 2012. than some of the Asian secular bull markets. Chart 1: All Ordinaries Index Source: HSBC, Bloomberg, Updata 24 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: AUD-USD Source: HSBC, Bloomberg, Updata Chart 3: Australia Government 10-Year Yield Source: HSBC, Bloomberg, Updata 25 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 United States of America Supercycle downturn in social mood Chart 1 below remains the dominant driving force Chart 2 shows the Dow in honest money (gold) behind Western markets. It shows that the very terms and how the bear market has accelerated long-term Elliott Wave structure for the Dow Jones below a trend channel, creating a huge divergence Industrials index is very bearish. At least a with the Dow in fiat dollar terms as the QE bubble Supercycle degree wave (V) ended 12 years ago and has developed. probably a Grand Supercycle wave III (circled). The Chart 3 shows that volume in the S&P 500 declined movement since then has been a cycle wave a down during the rally from 2009 – a classic bear market into 2003 with wave b higher into 2007. C waves rally sign. It also shows that the American consist of five waves so the crash in 2008/09 was Association of Individual Investors Bull / Bear just wave 1 (circled) of a five wave movement that Ratio is nowhere near the pessimism levels required takes the index much lower over the next couple of for a lasting low to be put in. Hope still lingers and years. 5,000 is a trend line support from the 1932 only when the majority of the market crowd have low and so should provide a stopping point of some abandoned all hope and thrown in the towel on the description. Lower potential remains. market will the sentiment conditions be in place from where a new bull market can develop. Chart 1: Dow Jones Industrials Source: HSBC, Bloomberg, Updata 26 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 3 also shows that our Sector Rotation Index, not at the levels of extreme pessimism required although pointing to a trend towards defensive for major market bottoms. sector leadership since the spring of 2011, is also Chart 2: Dow Jones Industrials / Gold Source: HSBC, Bloomberg, Updata Chart 3: S&P 500 Index Source: HSBC, Bloomberg, Updata 27 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 4 shows that the Nasdaq Composite has The new lows on the US Treasury 10-Year bond reversed at a pivotal old support line and from the yield in 2011 have not been matched by new lows 2007 high resistance with bearish divergence vis- in monthly RSI and so the market remains à-vis the monthly Relative Strength Index (RSI). vulnerable to a reversal higher. In our view 2.42% remains the critical pivot point though. Only a Apart from the fact that the monthly RSI in 2009 consolidation above that level would increase in Chart 1 of the Dow was the lowest it had been confidence in the higher-yield scenario. Until that in the 110 years of this data history, there is very happens it is best not to fight the downtrend little technical evidence to suggest that the bear too much. market which started 12 years ago is over. The next wave down in 2012 and beyond has the With regard to credit markets, Chart 7 shows that potential to be one for the history books. the pressure is for higher levels in the Markit CDX Investment Grade 5-Year index. With regards to the US dollar, Chart 5 shows that the divergence between the broad trade-weighted index’s new lows in 2011 and the narrower DXY index has led to the anticipated reversal higher. The USD has potential to move much higher throughout 2012. Our ‘stop’ on that bullish USD analysis would be if the DXY moved below the 2011 low of 72.69. Chart 4: NASDAQ Composite Source: HSBC, Bloomberg, Updata 28 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 5: USD Broad Trade Weighted Index Source: HSBC, Bloomberg, Updata Chart 6: US Treasury 10-Year Yield Source: HSBC, Bloomberg, Updata 29 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 7: Markit CDX Investment Grade 5-Year Source: HSBC, Bloomberg, Updata 30 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Canada Canadian dollar to weaken versus US The peak in Canadian social mood was 12 years now in wave C lower towards 8,000 over the next ago in 2000 as measured in real (gold) terms. few months. That, as chart 1 shows, coincided with Primary USD-CAD is in a new longer-term bull cycle that degree wave 3 (circled) on the S&P/TSX should take the market much higher in 2012. A Composite index. Third waves are usually the rise above the 2009 high of 1.3065 cannot be strongest and most powerful phase of a bull ruled out. market with fifth waves usually characterised by divergences and a subtle weakening in the New (post January 2009) lows in the Canadian underlying market. Government 10-year yield have not yet been matched by new lows in the monthly Relative So the new highs in the index during Primary Strength Index and so we must remain wary of a wave 5 into the June 2008 top were not matched reversal higher. by new highs in the index priced in gold terms – a classic divergence. The move higher from the 2009 low counts best as a three wave movement and therefore the probability is that the market is Chart 1: S&P / TSX Composite Index Source: HSBC, Bloomberg, Updata 31 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: USD-CAD Source: HSBC, Bloomberg, Updata Chart 3: Canada Government 10-Year Yield Source: HSBC, Bloomberg, Updata 32 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Latin America Sideways to down in 2012 but long-term bullish Currencies under pressure Elliott Wave structures in Latin America suggest markets priced in both nominal and real terms and that a negative social mood should dominate in when both are declining or rising together we will 2012 as corrective waves mature. have the best indication of whether the trend is being confirmed. A strong underlying market in With its history of currency instability and social mood should see stock markets rising in devaluation, it is perhaps most instructive to view both nominal and real terms. And this has not Latin American stock markets in real terms – in been happening in Latin America. terms of honest money, gold. In Mexico, the peak of the stock market in gold And if we do that we can see a picture that is terms was in July 2007 and at the start of 2011 the similar to a lot of markets over the last few years. new high in the IPC index was not confirmed by a Even though the markets in nominal fiat currency new high in gold terms. However, the IPC index terms have rallied, when priced in gold we can see has found support at the old 2007, 2008 and 2010 that they have fallen and remain under pressure. highs with a massive increase in volume over the When measuring social mood we should look at Chart 1: Mexico IPC Index Source: HSBC, Bloomberg, Updata 33 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 last few months suggesting a huge battle taking In Brazil, the Bovespa index high in gold terms place between the bulls and bears. The wave was in 2008 and again new highs in the nominal structure suggests more downside to come over index at the end of 2010 were not matched by the next few months, but a rise above 38,900 highs in real terms. More downside is required to would raise the probability that the longer-term complete the correction and not until the market bull market is back on track. As for the Mexican clears resistance between 72,000 and 74,000 will peso, a continued rise towards 16 in USD-MXN the long-term bull market be back on track. The in 2012 seems most likely. Brazilian real should remain under pressure, but a drop below 1.6631 in USD-BRL would be a positive development for the currency. Chart 2: USD-MXN Source: HSBC, Bloomberg, Updata 34 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 3: Brazil Bovespa Index Source: HSBC, Bloomberg, Updata Similar to Mexico, Argentina and Chile are finding some support at the old 2007 highs in the nominal, fiat-currency-denominated indices. But even though the indices are up 180% and 230% respectively since 1997, both are down in honest gold terms. The good news in Argentina is that the January 2011 high was matched by new highs in gold terms and so this is a positive sign at least on a relative performance basis. 2,200 on the Merval index is an important pivot level, and the longer that level can hold as support the more positive the outlook becomes. A drop below it would target the 1,480 support. After tracing out a classic ending diagonal in 2011, the medium-term technical cycle for USD- CLP is higher. A rise to over 553 is probable in 2012. 35 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 4: USD-BRL Source: HSBC, Bloomberg, Updata Chart 5: Argentina Merval Index Source: HSBC, Bloomberg, Updata 36 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 6: Chile Stock Market Select Index Source: HSBC, Bloomberg, Updata Chart 7: USD-CLP Source: HSBC, Bloomberg, Updata 37 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Eurozone Marriage counselling required Euro to survive Feelings of anger, bitterness and dissatisfaction EUR terms going sideways to higher but the index are key drivers of negative social mood and one in gold terms moving lower. For those paying Socionomic manifestation of this is that divorce attention, the bull market since 2009 had a lot of rates tend to be higher in bear markets than in bull underlying problems with it and the catch up from markets. So it is not a surprise to Socionomists this divergence is now starting. that the eurozone is going through a period of self The long-term Elliott Wave analysis points to a reflection given that it is now in the twelfth year continued bear market that has potential to fall at of a bear market in real terms. least another 50% before a lasting low can be Chart 1 shows just how severe this bear market established. And as chart 2 shows, the centre of has been since 2000 with the red line marking the gravity in the market has changed with old DJ Euro Stoxx index in terms of gold (honest support becoming resistance. money). And we can clearly see the divergence But what is really interesting is that the Greek that has occurred since 2009 with the index in stock market actually looks close to a significant Chart 1: Dow Jones Euro Stoxx 50 Source: HSBC, Bloomberg, Updata 38 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: Dow Jones Euro Stoxx 50 Source: HSBC, Bloomberg, Updata Chart 3: Greece FTSE / ASE 20 Index Source: HSBC, Bloomberg, Updata low. Spain, on the other hand (Chart 4), has a technical analysis is pointing to a currency that bearish head and shoulders structure to it. remains under pressure in 2012 but that should The euro currency (Chart 5) has a bearish Elliott come back strongly. Wave structure versus the US dollar but retains And Socionomic evidence continues to mount to some bullish potential on some cross rates. The an extreme in anti-euro sentiment. Consider this 39 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 report from the UK’s Daily Telegraph on December 7, 2011 “Heavy metal band Metallica has brought forward a European tour scheduled for 2013 to next year over fears the single currency will collapse, jeopardising the chances of getting paid for the gigs.”. When the idea of ‘euro collapse’ has permeated into popular culture, it is a good sign that fears are becoming way overdone. The Euro Bund 10-year bond yield is displaying bullish divergence on the monthly chart meaning that new lows in yield in 2011 have not been confirmed by new lows in the Relative Strength Index. This, combined with a bullish wave count makes us anticipate higher yield levels in 2012. However, only a rise in momentum (for example the five-week moving average crossing above the 40-week moving average) would give us real confidence in this scenario. 40 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 4: Spain IBEX Index Source: HSBC, Bloomberg, Updata Chart 5: Euro Trade Weighted Index Source: HSBC, Bloomberg, Updata The iTraxx Europe Investment Grade 5-year formidable resistance and should provide a long- index has a bullish wave structure the emergence term pivot point. of bearish divergence between new highs in the index and no new highs in Relative Strength (RSI) on the weekly chart has led to a decline over the past three months. The 2008 high of 216 is a 41 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 6: Euro-Bund 10-Year Yield Source: HSBC, Bloomberg, Updata Chart 7: Markit iTraxx Europe Investment Grade 5-Year Source: HSBC, Bloomberg, Updata 42 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 United Kingdom Pound to fall with stock market Social mood in the United Kingdom (as measured Further evidence of the decline in UK social by the stock market priced in real money terms) mood comes from the decline in popularity of the has been declining for over 12 years. X Factor talent show. When a positive social mood dominates, people like vacuous Manifestations of this decline in social mood have been varied, but a general divisiveness in society entertainment, vote for the status quo, become has been the trend. Political debate has moved politically correct and buy stocks. As a negative away from the centre ground with attitudes social mood dominates, people prefer angry and hardening on the left and right of the spectrum. A edgy entertainment, vote for change, become recent survey carried out by the National Centre politically incorrect and sell stocks. The X Factor for Social Research shows that over 50% of those is a singing talent show which had its UK debut in questioned thought that unemployment benefits 2004. The show takes auditions from thousands of are too high, a large increase on a decade ago, and hopeful singers and eventually ends up in a finale there was a general trend towards self reliance of a few contestants singing cover versions of rather than a governmental ‘common good’. This well-known songs. The winner is almost always fits with the Socionomic hypothesis. the number one selling single at Christmas. Fans Chart 1: UK All-Share Index Source: HSBC, Bloomberg, Updata 43 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: Socionomics FTSE All-Share in Gold Terms X-Factor UK Viewing Figures (Momentum) 12 30% Aug - Dec Aug - Dec 2009 Series 25% 2008 Series 10 Rage Against 20% The Machine 8 Aug - Dec 15% 2011 series 6 10% 5% 4 Social Mood 0% 2 "Give it up…" -5% 0 -10% 2003 2004 2005 2006 2007 2008 2009 2010 2011 Source: HSBC, Bloomberg, Updata Chart 3: GBP-USD Source: HSBC, Bloomberg, Updata of the X Factor love the hype and ‘bling’ whereas Viewing figures momentum for the 2011 series is critics say that the show produces vacuous and down for the second straight year, which when manufactured talent. looked upon through a Socionomic lens would have been relatively unsurprising given the Chart 2 shows the UK stock market priced in real downturn in the stock market over the past few terms (in terms of gold) and the year on year months. But this evidence of the public turning change in average X Factor viewing figures. 44 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 away from what many consider to be vacuous and manufactured entertainment confirms that social mood is continuing to deteriorate. And this means continued pressure on stock markets. The bear market of the 1970s ended up with punk and hard rock music becoming very popular. Socionomic evidence suggests that similarly angry genres are on their way back. Chart 1 shows that an Elliott Wave supercycle degree wave (V) topped out in the UK All-Share Index 12 years ago and that the market is now entering wave three of C down. This should see the UK market decline by well over 50% over the next couple of years. There is a possible triangular wave count but this would be negated with a break of the 2009 low. 45 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 4: GBP Trade Weighted Index Source: HSBC, Bloomberg, Updata Chart 5: UK 10-Year Gilt Yield Source: HSBC, Bloomberg, Updata As for the currency, the British pound sports a 10-year Gilts have very strong support long-term wave structure that points to a decline around 2.18%. against the USD and the EUR over the course of 2012. EUR-GBP in particular has a bullish structure which should result in an increase in volatility and a move towards parity. 46 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Scandinavia NOK uptrend tired but wary of a final flourish Stocks under pressure Despite being viewed by some as the new ‘safe sell-off. But because the existence of divergence haven’, the technical evidence suggests that social only gives an indication that a market may about mood (the stock market) in Norway should continue to reverse its previous trend, we would not be to decline. A classic head and shoulders top on the confident of a sustainable reversal higher in EUR- OBX index in the first half of 2011 should provide a NOK until a trend measure (such as the 5- and 40- cap to the market for some time to come. However, week moving average cross) turned higher. Until the Elliott Wave structure suggests that Norway’s that happens, we must be on guard for a spike longer-term outlook is brighter than most with the lower in EUR-NOK, as happened in 2001/02. rise from the 2008 low counting well as a wave In Sweden, the OMX All-Share index is turning (1) of a new longer term bull market. However, that over into a new bear market that should take the still means wave (2) down is in force and second index below the 2008 low. As long as 333 holds waves are often very deep. as resistance, the focus should be on a EUR-NOK is displaying bullish divergence continued downtrend. meaning that new lows in price have not been confirmed by new lows in momentum (Relative Strength Index) and so the NOK is vulnerable to a Chart 1: Sweden OMX Index Source: HSBC, Bloomberg, Updata 47 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: Norway OBX Index Source: HSBC, Bloomberg, Updata Chart 3: EUR-SEK & EUR-NOK Source: HSBC, Bloomberg, Updata 48 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Russia Russian bear Ruble to decline Social mood in Russia, as measured by the real Ralph Elliott discovered that by connecting the stock market, has been in decline since 2006. top of first and third waves, and then drawing a parallel from the second wave low we can get a One of the manifestations of a negative social good idea of where wave four will end. This mood is a desire for change, and recent events in Elliott channelling technique suggests that support Russia are turning that way. When mood turns for the RTS Standard Index comes in around negative, it doesn’t matter what or who it is that 4,500 by the middle of 2012, rising towards 6,000 people want to change; they just want to change by the middle of 2013. the status quo. As for the Russian ruble, a classic impulsive move The wave structure suggests that social mood (the higher in USD-RUB in 2008/09 followed by a three stock market) will become even more negative in wave decline into May 2011 firmly points to higher 2012 with Primary degree wave 4 (circled) still in levels (a weakening ruble) in 2012. operation from the 2008 nominal market peak. Chart 1: Russia RTS Standard Index Source: HSBC, Bloomberg, Updata 49 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: USD-RUB Source: HSBC, Bloomberg, Updata 50 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Middle East Turkish stock market in long-term uptrend Middle East should outperform The Turkish stock market in nominal (Turkish The ‘Arab Spring’ that has occurred during 2011 Lira) terms has an Elliott Wave structure that fits the Socionomic hypothesis well because it points to a continuation of the long-term bull comes after a multi-year regional market in the years to come. However, in 2012 it underperformance versus the rest of the world. looks likely to be a sideways to down market The lower graph in Chart 3 on the right shows the towards long-term support around 35,000 on the GCC Index versus the rest of the world but the ISE National 100 Index. picture is the same if we included Egypt and Jordan in an equally weighted index. Relative USD-TRY has stalled at long-term resistance but performance has started to pick up in 2011 and, the Elliott Wave structure suggests a surge higher given the Elliott Wave counts on individual in 2012 before falling lower again. markets, this should continue in the years to come. The Middle East in general is actually one of the most bullish regions on the planet from a long- term Elliott Wave cycle point of view. Chart 1: Turkey ISE National 100 Index Source: HSBC, Bloomberg, Updata 51 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: USD-TRY Source: HSBC, Bloomberg, Updata Chart 3: Bloomberg GCC 200 Index Source: HSBC, Bloomberg, Updata 52 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Africa Shifting into a new era The structure of the technical cycle in South Chart 2 shows how a pivot line in USD-ZAR Africa has a lot in common with markets like turned the underlying market sentiment from Korea and India in that the 2008 / 09 bear market bearish to bullish. Throughout the early part of found support at an old resistance pivot zone. 2011 we were warning of a significant reversal higher in USD-ZAR and the subsequent rally This is very significant because it means there has from the May 2011 low of 6.5445 does not yet been a structural change in psychology from look complete from an Elliott Wave perspective. bearish to bullish. The FTSE/Johannesburg Stock A continued rally towards 9 looks probable. Exchange All-Share Index has significant resistance around the 33,250 level, but once it As for the frontier African markets, there is a case clears that sticking zone the market will be into a for counting an A-B-C correction from 2008 as new bull phase. The wave structure suggests that being complete. But only a rise above 1,018 on there will be a longer period of sideways to down the S&P Africa Frontier Index would start to before that happens. confirm that. Chart 1: South Africa FTSE / JSE All-Share Index Source: HSBC, Bloomberg, Updata 53 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: USD-ZAR Source: HSBC, Bloomberg, Updata Chart 3: S&P Africa Frontier Index Source: HSBC, Bloomberg, Updata 54 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Metals & Commodities Gold to repeat bear of mid 1970s But long-term mega bullish Socionomic aspect to 2011 commodities top Is gold a bursting bubble or is the real bubble well as industrial metal theft) has grown strongly phase still ahead? over the last couple of years. There are clear Socionomic signs that gold is near a top. On the face of it, there has been quite a lot of Socionomic evidence to suggest that at least an But is it THE top? Our Elliott Wave count on interim top in gold has been reached. Nobody was chart 1 shows that the recent high of USD1,921 is interested in gold when it was trading at USD300 an most likely a Primary degree wave 3 (circled) ounce back in the late 1990s and European central high. This means that that wave 4 down is upon us banks were selling their holdings off. But in 2009, that should last a number of months. But it also after a huge rise in gold to over USD1,000 an means that wave 5 is still ahead and that has the ounce, some central banks started to buy gold and potential to take gold towards USD3,000. gold vending machines started to appear. Suddenly, In the mid 1970s, Gold declined some 40% before everyone was interested in gold and that trend has rallying into the mania phase over 500% higher. continued. Now, even the criminal elements of We think a similar Elliott Wave structure is society are gold bugs as precious metal theft (as evolving now. Chart 1: Gold versus USD Source: HSBC, Bloomberg, Updata 55 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 2: Gold Index Source: HSBC, Bloomberg, Updata Chart 3: Silver / Gold Ratio Source: HSBC, Bloomberg, Updata The commodity market in general displayed a common sense because, given the human classical Socionomic aspect in 2011. condition of herding behaviour, there has to have been an uptrend in order to generate enough Initial Public Offerings (IPOs) normally occur at interest to offer the stock as an IPO. the end of an uptrend in the underlying market or in an asset class that is being ‘offered’. This is just 56 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Chart 4: S&P GSCI Commodity Index Source: HSBC, Bloomberg, Updata In May 2011 the world’s biggest commodities So just as with the Blackstone IPO in 2007 trader, Glencore, made a large and well marking the top of the private equity/credit bubble subscribed IPO. This occurred after the general and AOL buying Time Warner in 2000 marking commodities index had risen 149% from the the end of the Nasdaq bubble, another high February 2009 low to the April 2011 high and at profile, much-hyped corporate deal has probably an important Fibonacci retracement zone. Since marked an historic top. then the commodities index has continued to fall. 57 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Our technical analysis methodology Technical market analysis is, at its essence, a indicators with where the market is in the wave study of crowd behaviour and market psychology. structure results in a forced appreciation of the Keynesian paraphrase that the markets can remain R.N.Elliott’s Wave Principle is based on his overbought or oversold longer than you or I can empirically derived discovery in the 1930’s that remain solvent. Other sentiment indicators such as market prices move in recognisable, repeating option pricing, put/call ratios, positioning data and patterns and that these patterns reflect a basic surveys are also used in our methodology in order natural harmony manifested in the inherent to gather as much evidence as possible in coming herding behaviour of crowds. Elliott discovered to our technical analysis conclusions. that these crowd behaviour cycles appeared at With regards to translating these analysis every time scale and whilst they were repetitive in conclusions into actual trading ideas and structure they were not always repetitive in positions, we employ our Trend-Wave Trading amplitude or the time taken to form. Robert methodology. Trend-Wave Trading is an Prechter Jnr has developed Elliott’s Wave investment process that combines the technical Principle to uncover that a market driven by analysis of the Elliott Wave Principle with the human decision makers is a robust fractal that objective discipline of Trend Following. A may look chaotic but is actually following a potential trade set-up is given by the wave structured formal progression. Essentially a structure and supporting technical analysis such as detailed description of Dow Theory and the Japanese candlesticks, trend extension and orthodox pattern recognition of Edwards & exhaustion measures, momentum oscillators and Magee, Elliott’s Wave Principle (being based on sentiment. However, the trade is only executed price and volume) is the purest form of technical when there is an objective movement of analysis and is the foundation of our analysis momentum in the direction the technical analysis process. Please see the HSBC Elliott Wave suggests. Specifically, momentum is measured by Principle Basic Guide for a fuller explanation. the crossing of a short moving average (5 period) with a long average (40 period). If the market We enhance this analysis by overlaying a large price is also above an up sloping 200 period suite of indicators (Relative Strength Index (RSI), average when a buy signal is given or below a Moving Average Convergence Divergence down sloping 200 period average when a sell (MACD), trend exhaustion etc), volatility and signal is given, more confidence and size is given volume data to gauge sentiment and trend to the trade. Initial trade entry and full trade exit is strength, looking for divergences and governed by the moving averages acting as both a confirmation. It is vitally important in technical trailing stop loss and take profit discipline. By analysis to view indicators in relation to where the overlaying a disciplined, proven investment market is in its wave cycle. For instance, an strategy such as Trend Following on our technical oscillator showing that a market is overbought analysis we seek to run winning trades and cut could be a confirmation of the start of an extended losing trades early. up trend if it appears in the wave one position of an impulse wave. Failure to combine a reading of 58 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 2012 Technical Analysis: Wave Cycle Pressure & Major Support / Resistance Levels Asset Class Market 2012 Wave Cycle Pressure Support Resistance Stock Markets China (Shanghai A Share) 1,749 3,338 HK (Hang Seng) 10,676 24,988 Japan (Nikkei 225) 6,994 11,408 Korea (KOSPI) 1,402 2,229 Singapore (Straits Times) 2,165 3,313 India (SENSEX) 12,820 21,108 Taiwan (TAIEX) 5,961 9,207 Australia (All Ordinaries) 3,090 5,069 USA (S&P 500) 1010 1,576 Brazil (BOVESPA) 46,116 73,103 Euroland (Euro Stoxx 50) 1,765 3,077 UK (FTSE 100) 4,790 6,754 Russia (RSSTD) 6,953 12,810 Turkey (ISE 100) 40,342 71,776 GCC (Bloomberg GCC 200) 48.20 62.17 South Africa (JSE All-Share) 25,552 36,976 Currency Markets USD Index (DXY) 72.69 88.70 EUR-USD 1.1876 1.4940 GBP-USD 1.4229 1.6747 USD-JPY 72.06 101.32 AUD-USD 0.8067 1.1080 USD-CAD 0.9407 1.0932 USD-SGD 1.1992 1.4209 USD-KRW 1046 1277 USD-INR 43.85 54.31 USD-MXN 11.48 15.58 USD-BRL 1.5288 2.2036 USD-TRY 1.6301 1.9230 USD-ZAR 6.5445 9.8363 EUR-PLN 3.8232 4.9450 EUR-HUF 260.52 324.28 EUR-CZK 22.91 29.68 Rate & Credit Markets UST 10-Year Yield 1.57% 2.33% Euro-Bund 10-Year Yield 1.45% 2.37% UK Gilt 10-Year Yield 1.70% 2.79% JGB 10-Year Yield 0.83% 1.36% EMBI+ Spread 303 442 iTraxx EUR 5-Year IG 92 217 CDX USD 5-Year IG 75 151 Metal & Commodity Markets Gold (Spot) 1,155 1,921 Silver (Spot) 24.24 49.79 S&P GSCI 480 762 Crude Oil (Brent Future) 68.15 128.40 Source: HSBC = Up, = Down, = Range, = Down then Up, = Up then Down 59 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Notes 60 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Notes 61 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Notes 62 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Disclosure appendix Analyst Certification The following analyst(s), economist(s), and/or strategist(s) who is(are) primarily responsible for this report, certifies(y) that the opinion(s) on the subject security(ies) or issuer(s) and/or any other views or forecasts expressed herein accurately reflect their personal view(s) and that no part of their compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report: Murray Gunn Important Disclosures This document has been prepared and is being distributed by the Research Department of HSBC and is intended solely for the clients of HSBC and is not for publication to other persons, whether through the press or by other means. 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Information Barrier procedures are in place between the Investment Banking and Research businesses to ensure that any confidential and/or price sensitive information is handled in an appropriate manner. 63 渐飞研究报告 - http://bg.panlv.net Macro Technical analysis abc March 2012 Disclaimer * Legal entities as at 04 March 2011 Issuer of report ‘UAE’ HSBC Bank Middle East Limited, Dubai; ‘HK’ The Hongkong and Shanghai Banking Corporation HSBC Bank plc Limited, Hong Kong; ‘TW’ HSBC Securities (Taiwan) Corporation Limited; ‘CA’ HSBC Securities (Canada) Inc, Toronto; HSBC Bank, Paris Branch; HSBC France; ‘DE’ HSBC Trinkaus & Burkhardt AG, Düsseldorf; 8 Canada Square, London 000 HSBC Bank (RR), Moscow; ‘IN’ HSBC Securities and Capital Markets (India) Private Limited, Mumbai; E14 5HQ, United Kingdom ‘JP’ HSBC Securities (Japan) Limited, Tokyo; ‘EG’ HSBC Securities Egypt SAE, Cairo; ‘CN’ HSBC Telephone: +44 20 7991 8888 Investment Bank Asia Limited, Beijing Representative Office; The Hongkong and Shanghai Banking Telex: 888866 Corporation Limited, Singapore Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Fax: +44 20 7992 4880 Securities Branch; The Hongkong and Shanghai Banking Corporation Limited, Seoul Branch; HSBC Securities (South Africa) (Pty) Ltd, Johannesburg; ‘GR’ HSBC Securities SA, Athens; HSBC Bank plc, Website: www.research.hsbc.com London, Madrid, Milan, Stockholm, Tel Aviv; ‘US’ HSBC Securities (USA) Inc, New York; HSBC Yatirim Menkul Degerler AS, Istanbul; HSBC México, SA, Institución de Banca Múltiple, Grupo Financiero HSBC; HSBC Bank Brasil SA – Banco Múltiplo; HSBC Bank Australia Limited; HSBC Bank Argentina SA; HSBC Saudi Arabia Limited; The Hongkong and Shanghai Banking Corporation Limited, New Zealand Branch This document is issued and approved in the United Kingdom by HSBC Bank plc for the information of its Clients (as defined in the Rules of FSA) and those of its affiliates only. 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Recipients in Singapore should contact a "Hongkong and Shanghai Banking Corporation Limited, Singapore Branch" representative in respect of any matters arising from, or in connection with this report. HSBC México, S.A., Institución de Banca Múltiple, Grupo Financiero HSBC is authorized and regulated by Secretaría de Hacienda y Crédito Público and Comisión Nacional Bancaria y de Valores (CNBV). HSBC Bank (Panama) S.A. is regulated by Superintendencia de Bancos de Panama. Banco HSBC Honduras S.A. is regulated by Comisión Nacional de Bancos y Seguros (CNBS). Banco HSBC Salvadoreño, S.A. is regulated by Superintendencia del Sistema Financiero (SSF). HSBC Colombia S.A. is regulated by Superintendencia Financiera de Colombia. Banco HSBC Costa Rica S.A. is supervised by Superintendencia General de Entidades Financieras (SUGEF). Banistmo Nicaragua, S.A. is authorized and regulated by Superintendencia de Bancos y de Otras Instituciones Financieras (SIBOIF). The document is intended to be distributed in its entirety. Unless governing law permits otherwise, you must contact a HSBC Group member in your home jurisdiction if you wish to use HSBC Group services in effecting a transaction in any investment mentioned in this document. HSBC Bank plc is registered in England No 14259, is authorised and regulated by the Financial Services Authority and is a member of the London Stock Exchange. (070905) © Copyright. HSBC Bank plc 2012, ALL RIGHTS RESERVED. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, on any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of HSBC Bank plc. MICA (P) 208/04/2011 and MICA (P) 040/04/2011  64 渐飞研究报告 - http://bg.panlv.net Principal contributor Murray Gunn Head of Technical Analysis HSBC Bank plc +44 20 7991 6797 firstname.lastname@example.org Murray is Head of Technical Analysis, covering cross-asset markets of FX, interest rates, equity indices and metals and commodities. He joined HSBC in September 2010. He had spent most of his twenty-year career working on the buy side, as a portfolio manger in equity, bond and currency markets. A published author on technical analysis, Murray is a Certiﬁed Financial Technician (CFTe) and has been investing and trading with technical analysis since the early 1990s. He has served on the board of the Society of Technical Analysts (UK) and has been an active speaker at conferences on technical analysis.
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