Limited Upside for US Markets, China and Asia Set to Trend Upwards

Limited Upside for US Markets, China and Asia Set to Trend Upwards

As promised, I will be looking at a few globalindices to get a clearer picture of where individual markets seems to be heading. First up will bethe DowJones Industrial. The DJI has come down from 11,450 points to 11,000 points before the recent double day triple digit rally to bring it back to the 11,390 level. Looking at the chart, the first resistance level will be at the previous high level of 11,450 points. Should this resistance break, we can expect to see the market trend upwards within the band. Strong support will still be only at the 11,000 level.

Looking at theS&P 500 index, we can see that the index has already reached the resistance level of 1225 points (which is the previous high). Should the resistance level breaks, the next strong resistance level is actually pretty near at the 1240 pints level. Support should come in near the 1190 level. Both the Dow Jones Industrial and S&P 500 seems to show a limited upside potential of the US market. Should the market turn south again (most probably due to Europe side), the downside risk is definitely bigger.

Over to the Asian markets, let us start with theHang Seng Index. At the 23,240 level, the index is trading right in the middle of the band and could easily go either direction. Support level should come near 22,950-23,000 points. If this level breaks, the next level of support is expected to be very strong near the 22,150 level. Immediate resistance is expected near 23,870 points but if this breaks, we can expect to see the Hang Seng moves towards the level of the previous high at 24,960 points.

Since there is any clear direction from the Hang Seng Index, we could take a look at the closely relatedShanghai Stock Exchange. The China market had suffered a bad beating recently, tanking approximately 10% from 3180 points to 2870 points. At it's recent low, the index touched 2758 points, which is at the trendline support level. The trendline support is usually a very strong level which will hold. As such, the China market seems set to move upwards with a resistance level near the 3,000 level. With the look on the Shanghai Stock Exchange, the probability of the Hong Kong market going in the opposite direction will be much lower.

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