Shanghai: SSE Composite Index (.SSEC) stocks see-saw as trade deal uncertainties cloud market outlook
Hong Kong and China stocks swung between gains and losses before ending little changed on Monday, as traders remained cautious amid uncertainties surrounding an initial trade deal between the United States and China.
The Hang Seng Index shed 0.01 per cent, or 3.64 points, to 26,494.73. The Shanghai Composite Index rose 0.1 per cent, or 2.47 points, to close at 2,914.48, while the Shenzhen Component Index closed 2.35 points lower at 9,876.27.
“The whole focus of the market now is the ‘Phase One’ trade deal between the US and China,” said Stanley Chan, director of research at Emperor Securities.
Chan said investors wait until Sunday, when the US will have to decide whether to impose scheduled extra tariffs on Chinese goods, to make any significant moves. The Hong Kong market, which lacks a clear driver amid a gloomy economic outlook on both sides of the border, could drop to an even lower level if the two countries fail to strike a deal, he said.
If a deal is reached, the Chinese yuan could strengthen and benefit sectors such as Chinese financials, property developers and aviation stocks, he said. Meanwhile, a major anti-government march in Hong Kong on Sunday had little impact on the market, Chan added.
In China, steel companies led the advance. The highly cyclical sector is benefiting from a fresh round of price hikes, on expectations that infrastructure projects across China will increase as part of the government’s efforts to shore up its slowing economy. A gauge of 44 steel companies compiled by Citic Securities rose 2.3 per cent on Monday.
Meanwhile, Chinese pharmaceuticals declined broadly, as investors turned cautious after gaining spectacular returns from star drug makers this year. Jiangsu Hengrui Medicine, China’s largest pharmaceutical firm, dropped by 4 per cent to 83.62 yuan, after disclosing four executives planned to reduce their shareholding in the firm by no more than 626,000 shares, or 0.01 per cent of the overall stake. The stock has soared by a jaw-dropping 91 per cent so far this year.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 2,930.11.
The projected upper bound is: 2,969.86.
The projected lower bound is: 2,856.59.
The projected closing price is: 2,913.23.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 95.2706. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 15 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 50.81. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 54 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 106.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 1 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed up 2.464 at 2,914.478. Volume was 1% below average (neutral) and Bollinger Bands were 62% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 2,893.65 2,933.16 2,961.07
Volatility: 7 12 23
Volume: 13,621,690,368 14,534,480,896 22,894,534,656
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
SSE COMPOSITE is currently 1.6% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of .SSEC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 43 periods.