Higher risk appetite and improved sentiment bolstered stocks in China and Hong Kong: HANG SENG INDEX (.HSI)
Higher risk appetite and improved sentiment bolstered stocks in China and Hong Kong on Wednesday, as all benchmark indexes staged a mini rally.
The Hang Seng Index rose to a near six-month high, boosted by investors who are increasingly confident that the US China trade talks in Beijing this week will bring the two biggest economies in the world closer to a deal.
It finished up by 1.15 per cent, or 324.8 points, to close at 28,496.13, the highest level since August. All but eight of the 50 constituents of the blue chip index rose. Mainboard turnover climbed to HK$121 billion (US$15.42 billion).
Gains in Chinese indexes were even stronger. The Shenzhen Component Index rose 2.01 per cent, or 161.14 points, to 8,171.21, while the Shanghai Composite Index gathered momentum later in the day, closing up 1.84 per cent, or 52.56 points, at 2,849.66. That was its highest level since October.
On Wednesday, the SCMP cited sources saying President Xi Jinping “is scheduled to meet” members of the US trade talk delegation, including US trade representative Robert Lighthizer and Treasury Secretary Steven Mnuchin this week. If confirmed, such arrangements would signify a show of goodwill in trying to seal a deal with the US.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 27,203.29.
The projected upper bound is: 29,429.94.
The projected lower bound is: 27,651.87.
The projected closing price is: 28,540.90.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
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 94.3050. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 4 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 76.14. This is where it usually tops. 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 sell 3 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 134.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 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 23 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 326.260 at 28,497.590. Volume was 13% above average (neutral) and Bollinger Bands were 2% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 27,937.40 26,628.23 27,760.39
Volatility: 9 22 23
Volume: 1,689,380,480 1,691,733,504 1,828,490,368
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 2.7% above its 200-period moving average and is in an upward 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 into .HSI (mildly bullish). Our trend forecasting oscillators are currently bullish on .HSI and have had this outlook for the last 19 periods. Our momentum oscillator is currently indicating that .HSI is currently in an overbought condition.