MONTREAL - This week was positive for Asian equity markets, but correlations
between volatility and percentage move were low, and there were no sub-regional
patterns at all. This means that trading was swamped by events from outside
Asia.
As of early afternoon Friday in Tokyo, the MSCI Asia Pacific Index was up 1.1%
on the week to 119.63. It is continuing to respect the support in the 118-119
range but is not showing any real dynamism. Resistance continues in evidence at
123, 127, and 129, with another support at 100.
All of the exchanges reviewed here advanced. This week, I drop
coverage of New Zealand, adding Indonesia and Malaysia in its place. Wellington
lags them in total market capitalization, and their inclusion permits
inspection of a Singapore-Indonesia-Malaysia grouping in Southeast Asia. India
and Australia will be treated as non-regional unique markets.
The biggest gainer was the Australian All Ordinaries Index, closing up 3.9% on
the week to 4,577. Its short-term technical indicators turned positive at the
beginning of the week. It is now between its 50-day and 200-day moving
averages. Short-term resistance is at 4,615 and 4,632. An extremely important
descending-tops down-trend that began in the last quarter of 2007 cuts through
4,800 this week. It is a very significant constraint to watch.
The three Greater China indexes were all jumbled from previous behavior.
Taiwan, usually the least volatile, was the most so; and Shanghai, usually the
most volatile and biggest mover, fell between Taiwan and Hong Kong on both
accounts this week.
Shanghai's SSEC was up about 0.8% 2,655 at the close on Friday, after failing
four times this week to punch through a combined short- and medium-term
resistance at 2,660. The short-term technical indicators are very finely
balanced. The index has been in a very narrow trading range between 2,575 and
2,672 since the end of July. It is trying to recover from last week's
penetration to the downside of its short-term ascending-bottoms uptrend.
The TSEC/Taiex in Taiwan was the week's weakest performer, up only 0.6% to
7,380. Like the Australian index, the TSEC/Taiex is on the road to encounter
its long-term descending-tops down-trend, but in the short-term ahead and not
the medium-term. It has already last month respected that trend to the downside
in the 8,000 neighborhood, and another meeting will not be far off. Short-term
indicators have turned slightly negative.
Hong Kong's Hang Seng Index close the week up 2% to 20,971, recovering most but
not all of last week's loss. Last week, it failed to respect a potential
short-term support at 20,912. It failed to penetrate that level in the Friday
morning session but reached 20,920 in early afternoon before falling back. The
Hang Seng remains firmly ensconced in the middle of its 14-month trading range
but is now subject within that range to a definite declining-tops downtrend.
Short-term indicators appear to be turning neutral or negative.
The non-China Northeast Asian exchanges resumed their split behavior. Tokyo's
Nikkei 225 was the most volatile index in the region this week but the
second-worst performer, while Seoul's KOSPI was the third-least volatile and
the second-best performer.
The Nikkei was up 0.7% to 9,114, but not reversing the downside violation of
its short-term ascending-bottoms uptrend noted last week. The KOSPI finished at
1,780, up 2.9% on the week and escaping the violation of its congruent pattern
that it threatened last week. This is all the more remarkable for the fact that
the KOSPI's short-term technical indicators were negative for most of the week;
however, they became consistently less negative over time and are now almost
neutral.
Given the general tenor of the week, it is not surprising that the three
exchanges in the Southeast Asian group showed no more cohesion than the three
Greater China exchanges, which is to say none at all. It is nonetheless
remarkable that the KLCI in Kuala Lumpur was the region's least volatile over
the whole week yet marked the third-largest percentage gain, rising 1.4% to
1,433. It continues to have favorable short-term technical indicators, having
plowed through a long-term resistance in the low 1,400s in August. It is now
not far from its all-time high (notched January 11, 2008) of 1,516.
In Jakarta, the JCI was up 1.4% on the week to 3,147 despite some short-term
technical resistance. Volume has flagged a little and a breather may be called
for, but the JCI is a long-distance runner.
Finally in India, the BSE Sensex 30 is stumbling a bit Friday morning, up only
1.3% on the week as of early afternoon local time to 18,230. Short-term
indicators turned negative early in the week then started to improve again late
on Wednesday. The index has moved back a bit towards the middle of a short- to
medium-term up-trend channel after. There is a mild potential long-term
resistance at 18,242 but its eventuality is as yet unconfirmed.
To summarize, Asia muddled through this week, in fact muddled through rather
well, making uniform and steady if not remarkable progress. Nearly all the
markets reviewed, however, appear not to have decided for certain what to do
about their respective short-term ascending-bottoms up-trends to which I
pointed last week. Several of them in the medium term will encounter long-term
descending-tops resistances that will force a decision.
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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