Hong Kong: HANG SENG INDEX (.HSI) – Asian markets rally after Federal Reserve launches unlimited bond buying to shore up coronavirus-battered US economy
Asia-Pacific stocks rallied on Tuesday after the US Federal Reserve launched unlimited bond buying and took other steps while the US Congress appeared closer to a deal on a massive stimulus package to boost the world’s largest economy hammered by the coronavirus.
After Monday’s negative start to the week, Asia stocks rose in the face of the latest death toll due to the spreading respiratory illness: more than 16,000 people have died around the globe, with the highest single tally in Italy, with more than 6,000 dead. Meanwhile, Hong Kong was among governments including the UK tightening rules to try to prevent transmission of the disease. More than 1.5 billion people worldwide are on some type of lockdown.
The world’s central banks and governments are throwing the kitchen sink at the virus, with an array of fiscal and monetary policy steps. But volatile stock exchanges from Hong Kong to New York have tanked in recent weeks, falling into bear markets. Among major stock exchanges, only China isn’t in a bear market.
The Hang Seng Index finished with a 4.5 per cent gain at 22,663.49.
The high-turnover Tencent rose 4.9 per cent, while Alibaba Group Holding, the e-commerce giant that is the parent company of the South China Morning Post, advanced 2.6 per cent. SoftBank Group plans to sell US$14 billion in shares of Alibaba as it moves to raise US$41 billion to bolster its businesses hit by the pandemic, Bloomberg reported, citing people with knowledge of the matter.
The Shanghai Composite finished with a 2.3 per cent gain.
“Investors in Asia are focusing on the latest QE [quantitative easing by the US Fed] move. They believe Asia stocks will benefit from improving liquidity,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai.
He said traders were bottom fishing virus-battered stocks, leading to the big gains seen throughout the Asia-Pacific region.
“I think today’s rally in Asia is short-lived,” Wen added.
Seoul’s Kospi closed up 8.6 per cent, and the tech-heavy Kosdaq jumped 8.3 per cent.
South Korean President Moon Jae-in said his government will double a planned market rescue package to help contain the economic and financial fallout from the coronavirus outbreak. The package will now be 100 trillion won (US$80 billion).
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 25,487.56.
The projected upper bound is: 24,709.81.
The projected lower bound is: 21,703.71.
The projected closing price is: 23,206.76.
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.
An inverted hammer occurred. If this occurs during a downtrend (which appears to be the case with HANG SENG INDEX) it implies a reversal. Look for a confirmation of the reversal on the bar.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 4 rising windows in the last 50 candles–this makes the current rising window even more bullish.
A shooting star occurred (a shooting star has a small real body near the bottom of the candle and a long upper shadow). During an uptrend the long upper shadow indicates that the bears are gaining control and a top may occur.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
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 61.5712. This is not an overbought or oversold reading. The last signal was a buy 3 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 41.01. 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 buy 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 -16. This is not a topping or bottoming area. The last signal was a buy 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 sell 22 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 655.980 at 23,319.471. Volume was 59% below average (consolidating) and Bollinger Bands were 158% 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: 22,915.44 26,346.57 26,928.10
Volatility: 68 39 26
Volume: 3,922,104,832 2,395,254,272 1,779,187,712
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 gapped up today (bullish) on light volume. Possibility of a Common Gap which usually coincides with a lack of interest in the security. Common Gaps are fairly irrelevent for forecasting purposes. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
HANG SENG INDEX is currently 13.4% below its 200-period moving average and is in an downward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 40 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.