What We Are Watching
The failure to break out to new highs for the Nikkei in September meant that ATEC’s original scenario was wrong. We are now of the view that the index is still in the midst of a corrective wave count. The whole structure looks incomplete for now, but as the index gets close to its August lows, we will be looking for hints of selling exhaustion/reversal.
With this regional posterchild index breaking below its August lows, ATEC is of the view that we are very much into the last sub-waves down. Hence to have any shorts here is dis-advantageous. If our scenario still stands, we should also be looking for hints of selling exhaustion in the days ahead.
This market interests ATEC just as much as Nikkei. As mentioned prior, Hong Kong shows the most mature sub-wave counts of the entire correction since February. It is also here where the technical indicators are revealing strong hints of exhaustion. While we are not entirely sure how Evergrande (nor the entire real estate situation) will be resolved, we take it as a positive signal when the Hang Seng Financial Index (H-FIN) did not break its support levels. We will spend some time looking for potential longs here.
Good luck and stay zen.