Hong Kong: HANG SENG INDEX (.HSI) Beijing policy pledges wears off
Hong Kong’s benchmark stock index lost more than 800 points on Tuesday, erasing all of Monday’s gains, as a short-lived rally in the Chinese market fizzled out and a sharp drop in US futures indicated deeper losses to come on Wall Street.
The Hang Seng Index closed down 806.60 points, or 3.1 per cent, at 25,346.55.
On Monday, it had advanced 591.75 points, or 2.3 per cent, after mainland Chinese stocks posted their biggest jump in two and half years brought about by a flurry of support measures from Beijing to boost confidence in the economy and the market. The percentage gain was the biggest single-day increase for the gauge in a month.
“We knew the gains on Monday were temporary, but nobody expected the policy effect to fade out so soon,” said Castor Pang Wai-sun, head of research at Core Pacific-Yamaichi Financial Group.
“For now the market is not convinced the policies will actually help the economy, and investors are rushing to take profits and leave.”
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 27,186.24.
The projected upper bound is: 26,349.90.
The projected lower bound is: 24,212.77.
The projected closing price is: 25,281.34.
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 21 white candles and 29 black candles for a net of 8 black 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 58.9934. This is not an overbought or oversold reading. The last signal was a buy 6 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 36.90. 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 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 -57. This is not a topping or bottoming area. The last signal was a buy 4 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 12 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed down -806.600 at 25,346.551. Volume was 5% below average (neutral) and Bollinger Bands were 65% 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: 25,685.68 27,084.72 29,542.71
Volatility: 35 25 23
Volume: 2,013,843,456 1,869,696,640 2,153,917,696
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 14.2% 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 volume flowing into and out of .HSI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .HSI and have had this outlook for the last 12 periods.