Hong Kong: HANG SENG INDEX (.HSI) – Asian shares plunge after Wall Street’s worst day since ’87

Hong Kong: HANG SENG INDEX (.HSI) – Asian shares plunge after Wall Street’s worst day since ’87

Hong Kong: HANG SENG INDEX (.HSI) – Asian shares plunge after Wall Street’s worst day since ’87

Shares plunged in Asia on Friday, with benchmarks in Japan, Thailand and India sinking as much as 10% after Wall Street suffered its biggest drop since the Black Monday crash of 1987.

Markets worldwide have retreated as fears of economic fallout from the coronavirus crisis deepen and the meltdown in the U.S., the world’s biggest economy, batters confidence around the globe.

Trading was halted temporarily in Bangkok and in Mumbai after the main benchmarks in both markets hit the 10% downside limit. After trading resumed, Thailand’s SET 100 was down 8.7% and the Sensex in Mumbai had swooned 9.4%.

Losses in mainland China, where communities are recovering from the worst of the virus, were less severe, with the Shanghai Composite index down 3%. Most other regional markets had lost between 4% to 6% by midday Friday in Asia.

Overnight, the sell-off on Wall Street helped to wipe out most of Wall Street’s big gains since President Donald Trump took office.

The S&P 500 plummeted 9.5%, for a total drop of 26.7% from its all-time high, set just last month. That puts it way over the 20% threshold for a bear market, officially ending Wall Street’s unprecedented bull-market run of nearly 11 years. The Dow Jones Industrial Average sank 2,352 points, or 10%, its heaviest loss since its nearly 23% drop on Oct. 19, 1987.

Overriding concerns about the actual impact on business and trade is pessimism over how the crisis is being handled, with the “sum of all fears are culminating with the view that policymakers remain well behind the curve,” said Stephen Innes of AxiCorp.

Not all markets have suffered equally, but many are down by double-digits from just weeks earlier. Thailand’s SET has lost nearly 40% and the Philippines’ benchmark is down more than 30%.

Despite the huge Friday the 13th sell-offs in most markets, shares bounced back slightly from their lowest levels by late-mid morning. Tokyo’s Nikkei 225 was down 7.8% to 17,099.46. The Kospi in South Korea sank 7.2% to 1,702.56, Sydney’s S&P ASX lost 4.4% to 5,070.50 and the Shanghai Composite declined 3.3% to 2,826.37.

In Hong Kong, the Hang Seng lost 5.8% to 22,904.28.

The rout has come amid cascading cancellations and shutdowns across the globe — including Trump’s suspension of most travel to the U.S. from Europe — and rising worries that the White House and other authorities around the world can’t or won’t counter the economic damage from the outbreak any time soon.

“We’re starting to get a sense of how dire the impact on the economy is going to be. Each day the news doesn’t get better, it gets worse. It’s now hit Main Street to a more significant degree,” said Liz Ann Sonders, chief investment strategist at Charles Schwab.

Stocks fell so fast on Wall Street at the opening bell that they triggered an automatic, 15-minute trading halt for the second time this week. The so-called circuit breakers were first adopted after the 1987 crash, and until this week hadn’t been tripped since 1997.

The Dow briefly turned upward and halved its losses at one point in the afternoon after the Federal Reserve announced it would step in to ease “highly unusual disruptions” in the Treasury market and pump in at least $1.5 trillion to help calm the market and facilitate trading.

But the burst of momentum quickly faded.

The coronavirus has infected around 128,000 people worldwide and killed over 4,700. The death toll in the U.S. climbed to 39, with over 1,300 infections. For most people, the virus causes only mild or moderate symptoms, such as fever and cough. For some, especially older adults and people with existing health problems, it can cause more severe illnesses, including pneumonia. The vast majority of people recover from the virus in a matter of weeks.

The combined health crisis and retreat on Wall Street have heightened fears of a recession.

Just last month, the Dow was boasting a nearly 50% increase since Trump took the oath of office on Jan. 20, 2017. By Thursday’s close, the Dow was clinging to a 6.9% gain, though it was still up nearly 16% since just before Trump’s election in November 2016.

The Dow officially went into a bear market on Wednesday, when it finished the day down more than 20% from its all-time high. For the S&P 500, this is the fastest drop since World War II from a record high to a bear market.

In other trading, the oil market, which suffered huge shocks last week, is still on the decline.

U.S. benchmark crude lost 1.8%, or 60 cents to $30.90 per barrel in electronic trading on the New York Mercantile Exchange. Brent, the standard for international crude pricing, gave up 47 cents, or 1.4%, to $32.75 per barrel.

The U.S. dollar rose to 105.22 Japanese yen from 104.63 yen late Thursday. The euro edged lower to $1.1184 from $1.1181.

Technical Indicators

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 26,726.14.

The projected upper bound is: 25,100.63.

The projected lower bound is: 22,798.92.

The projected closing price is: 23,949.77.

Candlesticks

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 4 white candles and 6 black candles for a net of 2 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 Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 27.5823. 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 25.53. 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 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 -191.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 8 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 14 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -276.160 at 24,032.910. Volume was 206% above average (trending) and Bollinger Bands were 89% wider than normal.

Open     High      Low     Close     Volume___
22,519.32024,184.48022,519.32024,032.9105,495,155,712
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 25,571.97 27,286.03 27,104.83
Volatility: 38 27 22
Volume: 3,123,951,872 2,051,159,552 1,710,406,400

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.

Summary

HANG SENG INDEX is currently 11.3% 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 32 periods. Our momentum oscillator is currently indicating that .HSI is currently in an oversold condition.

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