MONTREAL - Japan was both the most volatile and the biggest mover among Asian
markets last week and South Korea ranked third on both criteria (up 7.1% on the
week, nearly unchanged on the fortnight, and up 5.2% over four weeks). The
Nikkei, closing at 10,136 is still in a slight medium-term downtrend. It has
been in a trading range from 9,000 to 10,770 for seven months now, and by one
technical measure it is quite overbought. Other measures give it room still to
run a bit, should it so choose. Recent volume is better than over the last few
months but nowhere near remarkable.
South Korea's KOSPI closed at 1,625, up 6.6% on the week but down 0.3% on the
fortnight and up 3.5% over four weeks. It is closer to being technically
overbought than the Nikkei 225, to
which it has a similar pattern over the medium term, including the trading
range (proportionally much narrower, from 1,600 to 1,700) and a more marked
recent that will act as potential resistance during the next few days.
Of the three Greater Chinese markets, Hong Kong's Hang Seng Index was up 6.5%
on the week to 22,498 but similarly unchanged over the fortnight while up 3.4%
over the four weeks. It had been in an up-trend since July but this collapsed a
week ago and the current move is an attempt at recovery. However, the trend was
an oblique triangle and the November 21-23 sell-off signaled the breakdown.
Short-term technical indicators are mixed but on balance more negative than
positive. The index would have to recover to about 23,000, and do so quickly,
for this new negative trend to turn inconsequential.
Shanghai, however, continues to be the most dynamic, followed by Hong Kong and
then Taiwan. The Shanghai Stock Exchange Composite (SSEC) was up 7.1% on the
week to 3,317, nearly unchanged on the fortnight yet up 5.2% over four weeks.
It was the second-best performer of the week and the second most volatile. It
is overbought in the very short term and may take a breather but could still
show strength. The next important resistance is in the 3,340-3,350 range.
The Taiwan Stock Exchange Composite (TSEC) finished down 2.1% on the week to
7,651. It was the second-least volatile of the week, was nearly unchanged on
the fortnight, and was up 2.5% on the four weeks. The short-term technical
indicators are indeterminate - there is short-term support around 7,500 while
on the upside, a sustained close above 7,700 will be very favorable.
Australia and New Zealand were relatively quiescent, and this week Singapore
joined the pattern. These three exchanges were three of the four least volatile
and four smallest gainers on the week (during which none of the exchanges
covered here ended with a loss). There was, in fact, a remarkable and unusual
stratification: the three biggest gained were also the three most volatile.
Singapore's Straits Times Index (STI), however, closing at 2,791, is the
strongest of the three, indeed the only market index here that was one of the
three best performers in the three weeks preceding the one just ended, with
diminishing but consistent gains from week to week, making it the best
performer over the last four weeks, up 5.2% over the period. The STI is now
close up against an important resistance from March 2008 at 2,833. Its momentum
since this March has been decreasing. Short-term technical indicators are
either neutral or negative. There is support in the low 2,700s but its strength
is untested.
Australia and New Zealand do not bear much comment. The former has seesawed in
a trading range since early September, the latter since early August. The
Australia All Ordinaries Index, closing at 4,721, has already two months ago
hesitated once up against the resistance interval from 4,700 to 4,850. Volume
has been falling steadily off for five months. There is some potential here for
further backing and filling, with perhaps another false start, but that may be
all unless Shanghai surges, taking raw materials and hence Sydney with it.
The New Zealand 50 Gross (NZX) closed at 3,146, still falling from its
short-term high seven weeks ago at 3,253. This level was first sketched as a
possible resistance in February 2005 and then confirmed in December of the same
year.
That leaves Mumbai. The BSE Sensex 30 closed at 17,102, up 2.8% on the week. It
is up only 0.5% on the fortnight yet has gained 4.2% over four weeks. In
mid-October, it failed once to punch through the mid-17,300s, which arguably
represent a resistance inherited from mid-May 2008, with a number of other
resistances also scattered thereabouts. Short-term technical indicators show it
a bit overbought but still with some positive although diminishing momentum.
Volume has fallen off over time.
After weeks of relative quiescence, then, Tokyo and Seoul continued last week
to be among the most volatile and the biggest movers, as they had been for the
previous two. Yet most exchanges merely recovered their losses of the previous
week, finishing within half a percentage point of their close a fortnight ago.
The exceptions were Japan (up a phenomenal 10.4% on the week and 5.5% on the
fortnight but down 2% over four weeks), and New Zealand and Singapore, which
were each up 1.1% on the fortnight (the gains having come over the week just
ended). This left the gains and losses of the previous fortnight mostly intact
for the other exchanges.
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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