Chinese drugmakers lead losses on Hong Kong: HANG SENG INDEX (.HSI) amid policy worries
Hong Kong shares rose for the first time in six days on Wednesday after the U.S. Federal Reserve indicated the possibility of monetary easing to help weather economic headwinds.
The Hang Seng Index climbed 0.5% to 26,895.44 after falling 2.3% over the past five trading days. Social media and gaming major Tencent Holdings climbed 1.2%. Pan-Asia insurer AIA Group added 2.2%. The two heavyweights contributed to more than half of the gauge’s gains by points.
Pork producer WH Group, which shed 24.1% in May amid escalating Sino-American trade tensions, added 3.7%. Sunny Optical Technology Group rose 2.3%. The stock had slumped 30.1% last month after its client Huawei Technologies was added to a list of companies that would require government approval to buy components and technology from American companies.
Chinese drugmakers extended losses, with Sino Biopharmaceutical slumping 8.4% and CSPC Pharmaceutical Group declining 4.8%. Beijing had on Tuesday included the companies’ units on a list of 77 pharmaceutical companies the government plans to audit to improve the nation’s “medical security” systems.
Financial services company Jefferies said the inspection is negative for market sentiment toward drugmakers and believes it will “deepen concerns” about price cuts.
The Dow Jones Industrial Average added 2.1% overnight after Fed Chairman Jerome Powell said at a conference that the central bank is “closely monitoring the implications” of trade dispute developments between the U.S. and China, Mexico and other nations, and “will act as appropriate” to sustain economic growth.
“The confirmation of a potential precautionary rate cut in the second half is good for risky assets, including equities,” said Ricky Huang, an analyst at Luk Fook Financial Services. “The Hang Seng Index is due for a short term rebound,” and Powell’s remarks serve as a “catalyst.”
The Fed raised rates four times in 2018 and had earlier signaled the possibility of more rate increases this year.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 27,996.46.
The projected upper bound is: 27,638.59.
The projected lower bound is: 26,055.27.
The projected closing price is: 26,846.93.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 21.8315. This is not an overbought or oversold reading. The last signal was a buy 0 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 28.35. This is where it usually bottoms. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 6 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 -88. This is not a topping or bottoming area. The last signal was a buy 0 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 sell 31 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 133.920 at 26,895.439. Volume was 1% below average (neutral) and Bollinger Bands were 21% wider 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: 27,110.25 28,818.31 27,445.52
Volatility: 11 17 22
Volume: 1,988,955,392 2,021,379,584 1,866,304,256
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.
HANG SENG INDEX is currently 2.0% 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 moderate flows of volume out of .HSI (mildly bearish). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 20 periods. Our momentum oscillator is currently indicating that .HSI is currently in an oversold condition.