Hong Kong: HANG SENG INDEX (.HSI) again proves itself to be the comeback town
Hong Kong’s stock market was hammered by the US-China trade war, violent protests and the mainland’s economic slowdown. But it came roaring back, gaining 9.1 per cent in 2019 and keeping the crown as the world’s largest initial public offering market.
“It was a fruitful year amid uncertainty,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai. “A high single digit return for (the Hang Seng Index) is better than expected. Some bearish analysts expected the HSI might fall to 22,000 in 2019.”
The Hang Seng Index said goodbye to the roller-coaster year at 28,189.75 points, with half-day trading that saw a 0.5 per cent decline. It ended 2018 – a miserable year in which it lost 13.6 per cent – at 25,845.70 points.
Still, the Hang Seng’s yearly performance was trounced by that of the Shanghai Composite Index.
The Shanghai Composite Index finished 2019 with a yearly gain of 22 per cent. That followed a 24.6 per cent fall in 2018, with the main gauge closing at 2,493.90.
On its final trading day, the Shanghai benchmark rose 0.3 per cent to 3,050.
This year was the seventh time in 11 years that the Hong Kong main board ranked as the top of the IPO market worldwide, including in 2018.
On the mainland, the A-share market shot up from this year’s lowest close of 2,464.36 on January 3 to 3,270.80 on April 19 as Beijing’s monetary easing shored up investors’ confidence in the market despite lingering concerns about an escalation of the US-China trade war.
But the key indicator since retreated after Beijing tightened monetary policies and fluctuated in volatile trading.
Global index compiler MSCI lifted the weighting of China’s A shares in its benchmark gauges three times in 2019, directing an influx of foreign capital into the yuan-denominated share market.
China International Capital Corporation, one of the mainland’s leading investment banks, predicted that the last round of adjustment in MSCI gauges would result in overall inflows of up to US$40 billion from passive and active funds.
The Shanghai Stock Exchange launched the Technology Innovation board, the Star Market, on July 22, which for the first time adopted a registration-based initial public offering mechanism and allowed unprofitable firms to raise funds from the mainland’s equities market.
Consumer stocks were the top gainers on the mainland in 2019, with the CSI consumer index advancing 79 per cent.
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 27,308.70.
The projected upper bound is: 29,393.27.
The projected lower bound is: 27,766.48.
The projected closing price is: 28,579.88.
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 5 white candles and 5 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white candles.
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 84.0299. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 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 70.87. 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 1 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 128.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 1 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 12 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 353.770 at 28,543.520. Volume was 19% below average (neutral) and Bollinger Bands were 69% 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: 28,044.85 27,089.19 27,558.99
Volatility: 12 19 19
Volume: 1,337,801,472 1,469,089,280 1,686,758,144
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 3.6% 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 10 periods. Our momentum oscillator is currently indicating that .HSI is currently in an overbought condition.
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