Prepare for a much more interesting 2016

We come to the end of Y2015.  Beside Japan Nikkei and China Shanghai and Shenzhen, other major ASIA markets closed below Y2014 YEC.  Recently I mentioned couple of times that "Once again Taiwan took the lead........" I shall pull out Taiwan's charting, study their up coming election to analyse how their market may progress.

Taiwan introduced their first direct election in May 1996.  Lee Teng Hui (party: Kumintang) was elected.  He continued his president journey back since Y1988 to Y2000.  KMT (Kumintang) lost the election in Y2000.  Chen Shui Bian from Democratic Progressive Party (DPP) held the president helmet from Y2000 to Y2008.  Then in Y2008 election, KMT candidate Ma Ying Jeou won back the battle to became the third elected president for Taiwan.  He was also the first president for Taiwan meeting up China President Xi JinPing in Singapore since Y1949.

Now, we go to the chart and look at how the election result affected Taiwan market.  Y2000 election, KMT lost to DPP.  Market crashed.  And Y2008 election, DPP lost to KMT.  Once again, market crashed.  So what about Y2016 election?  Who will win the battle, KMT or DPP?  Will market crash, repeat on what had happened in Y2000 and Y2008?  

According to survey, there is a chance that the DPP will win the battle.  Now we take a closer look (zoom in) at the charting in Y2000 and Y2008.  Infact, market started to tumble months before the actual election and hand over took place. 

Now, we look at how market respond to the up coming Taiwan January 2016 since survey result showed that DPP could win the battle over KMT.  We saw Taiwan market started to tumble in somewhere May 2015.  It came down right from the top of 10014 points to August 7203 points.  Losing 2811 points or 28% in 3 months.  Then it had a pulled back (some cd it upside - buy/long) to 8871.  Whether it was a pull back or somebody called it upside, buy/long opportunity I called this as an opportunity for you to sell if you were holding a long position.  In Chinese, I called this as 逃命反弹.  Why I said that?  Look at the thick blue lines that I drew on the chart.  Those who know about "Elliott Wave" what do you see?

Two more weeks into the Taiwan's president election.  There were/are two forces out there - one is the sell down and the other is fund from XXX to support the market from melting down so as not to let the market looks ugly before election take place.  Who will win the battle?  Sit tight and enjoy the battle. 

Let's us look at other ASIA markets.  US raised their interest rate.  The projection for the US interest rate is 1.375% by end 2016, 2.375% by end 2017 and 3.25% by end 2018.  If I will to use the 2016 number, every quarter, we are expected to see a 0.28% increase on the US interest rate.  As I said US rate hike is non-favourable to ASIA and emerging markets as fund will flow back to the US.  In other words, I am not favourable toward ASIA markets.

I knew that a lot of retail investors (me too) received messages whether from their trading representatives, fund mangers, analysts........asking them to buy/long, we started to see positive sign right now.  Well, until now, I don't see any reason STI could go to 3550 (Y2015 high) or even hit 3906 (Y2007/history peak). 

China, the only ASIA market that I was not shortening it.  SSE reached the height of 5176 in mid June 2015.  A 160% rise from its psychology support level in just 10 months.  Then it tumbled 45% to 2850 low in August 2015.  A lot of analysts, fund.....said that China market is gone, economic is weakening, stay out from the China market. 

I see those coaster ride and commends differently.  When SSE raised 120%, I mentioned in my blog - "Watch out.........as it has gone up too fast and too steep.  How it gone up, how it will come down."  When it came down to 2850, I mentioned that 3000 to 3500 will be an ideal range for SSE.  Over the past four months it has been trading inside this range. 

Where else for the China economic, I don't see it was that bad as what many analysts called out.  To me, today China economic numbers is more trustable than years back.  Where else on the flip, I am worry about China market.  He is not the big brother.  Fund managers, analysts.....believe that their economic is weakening.  Big players, big boys.....may sell down China market when.......    

Let's look at Europe market.  With the helped of ECB injecting €1.1 trillion (£834bn) into the ailing Eurozone economy / buying €60bn bonds each month from banks, DAX and CAC above Y2015 YEC.  According to initial planned, ECB buy €60bn bonds each month from banks until end of Sep 2016, or even longer.  So does that mean the European market will continue bullish until Sep'16 or even longer? 

Let's look the European big brother DAX index charting.  Look at the thick blue lines that I drew.  What do you see?  DAX reached the peak/history high of 12390 in mid April.  After that, she came down with a din-don path and reached 9325 in end September.  Later it pulled back up to 11430 with the hope of more QE to be announce by ECB.  However the announcement from ECB disappointed everyone.  Will ECB have more QE in term of expand, extend........?  US rate hike definitely put some pressure on the Europe.

Big brother US ended with mixed results.  DOW and S&P closed below Y2014 YEC where else NASDAQ closed above YEC.  58th quadrennial US presidential election scheduled to take place in 8-Nov'16.  The primary elections and caucuses are scheduled to take places between February and June 2016. 

Whoever step down for sure wish to retire with pride and respect.  Does that mean the US will continue bullish and hit 20000 points for the DOW?  I foresee a similar approach but different version to the US markets. 

Prepare for a rougher ride.  Sit back, sit tight, a much more interesting 2016 drama is on the way.  温水煮青蛙 - commodities down, gold down, oil down...........the follow by ......the game has began.