No Comments Written by Anthony Truong on November 12, 2007 – 2:35 pm

Asian markets are plummeting today: Nikkei down 3.22% (recovered from being down 4%); Hang Seng down 4%; ASX200 down 1.4%; Shanghai composite down 3.6%; Strait times down 3%.

Looking at the Nikkei’s intermediate-term chart, it almost looks as though it’s reentering a bear market, as it did not follow other global indices to new highs in recent months, but has continued to make lower highs. The dominant trend appears down; could it be leading the world markets? If it is entering a bear market, will other global indices be able to push forward in what we expect will be a final 5th wave (from the lows of 2002) and ignore Japan?

Despite heavy falls over the past week in the Hang Seng, its structure still allows for another high in a 5th wave, but we are cognisant of the fact that a 4000 point drop is no laughing matter. Expect further weakness as it completes a suspected a-b-c pattern (currently in C); following this move we can then determine if in actual fact we are witnessing impulsive action to the downside.