Dragon Whisper

The Hang Seng is surely making a nice come back from the very oversold levels that it was trading at. The Hang Seng has gained more than 12% in 3-4 trading days and it is approaching its 1st Resistance levels at 18300 points, for the ones that bought stocks when the Hang Seng was trading 16000s this bounce should be welcomed as an opportunity to sell 35% of their long positions and to perhaps lock up some gains. The 2nd and major resistance in the Hang Seng is 19600 points. At this level people should completely sell their long position and should look to short the Hang Seng market. 19600 points will be the ceiling of this technical bounce on the Hang Seng

Dragon whisper made a prediction 10 days ago that the Hang Seng will head to 15400 points, well the level was not hit and the Hang Seng bounced off the 16200 level. Of course our prediction was a conservative one and we believe to make conservative predictions is the right move when it comes to capitalize on a bounce in a downtrending market. Catching falling knifes can be very hurtful sometimes.

Nonetheless, the Hang Seng has bounced the situation looks a lot calmer than it did 3-4days ago. The Europeans saved Dexia Bank and that is a relief for the market even though in our opinion nothing has really changed, nationalizing a Bank reflects upon the disaster situation that Europe is in and it should not be taken as a sign that better days are coming. This situation also reminds us of how interconnected Asia and Hong Kong with the European Banks is, and how dire the situation for China has become.

Many investors believe that China can not withstand a second financial shock coming from Europe and losing its other big export market after the US. The situation in Europe is exposing Chinas dependence on the US and European markets.

We at Dragonwhisper also believe that China will be less willing to issue a 2nd stimulus of 600 billion US$ like it did in 2008 during the US crisis since China has to deal with its 6% inflation. This is why we do not believe in this rally, since nothing has changed and the dire conditions of the global economy are still as negative as they were last week, the situation is still too fishy to trust the market with any  money.

I really have a hard time putting any money in the market when I found out that DEXIA Bank could have gone bankrupt if it didn’t receive any help, I wonder how many other banks like DEXIA are still outthere?

I am not trusting this and investing is about trust.