Short
term Bottom Confirmed!

As of
5:58 pm last October 13,2008, US Dow equity index futures are up 361
points closing at 8731, with an intraday high of 8,801. Oil which
would represent commodities, have started picking up going to 81.48,
up 3.78 from last Friday’s close which sent it intraday trading
at 77.00, in its lowest. AUD/USD which has been the gauge of
investor fear has also started to find a lot of people’s risk
appetites coming back, bouncing from its low of 0.6370 last Friday to
open .6652 today and managing to stay at 0.6702 as of writing. On
the local currency front, PHP also started to appreciate signaling
that a short term top in the USDPHP trade has been formed. We don’t
discount that the USDPHP chart’s long term trend is still going
up but that it will correct short term, which is a sign that risk
aversion is dissipating.

I copied
the chart of Asia pacific indices this Monday to note that the rally
was broad based. Note that Nikkei and the Japanese indices are only
down mainly because they are closed for a holiday. The 1% uptick in
the Philippines is puny compared to the whopping 10.24% gain in the
Hang Seng Index.

If the
above charts do not convince you that a short term bottom is in play,
perhaps talking about credit default swaps, TED spreads would help
but I am not gonna spend another page convincing you anymore. That
is not the main play. Let’s talk about that 10.24% rally in
the HK market this October 13, 2008 which actually stemmed from the
11% rally of the US indices last Friday, as well as all the
government interventions that the G7 did last Saturday.

Daily
Chart of HK Market

You don’t
need a single MACD to tell you that this volume accompanied with
today’s bullish reversal will lift the index back to 18,000
levels.

As they
say, those who throw the towel usually find themselves too numb and
callous to see that this bear market reversal is the REAL THING.
This is the short term bottom all traders have been hoping to happen!

Stock
Picks:

China
Tracker Fund (2823 HK)

Note the
large increase in volume accompanied with the upsurge.

Support:
9.00

Resistance:
11.20

Entry:
9.50 or lower

China
Cosco (1919 HK)

Note the
large increase in volume accompanied with the upsurge as well as the
increased volume activity of China Cosco for the past week alone.
This tells traders that there is real demand willing to buy China
Cosco. This is my top pick that will deliver substantial returns.

Support:
4.70

Resistance:
6.00/7.00

Entry:
5.10 or lower

Disclosures:

Author
is long the following HK shares: 2823 HK @ 9.10, 1919 HK@ 4.66