Hong Kong: HANG SENG INDEX (.HSI) Chinese officials boosted investor hopes of policy support for a slowing economy

Hong Kong: HANG SENG INDEX (.HSI) Chinese officials boosted investor hopes of policy support for a slowing economy

Hong Kong: HANG SENG INDEX (.HSI) Chinese officials boosted investor hopes of policy support for a slowing economy

Hong Kong shares rebounded on Monday after two straight sessions of losses amid cautious optimism that China and the United States will work out a trade deal, and as Chinese officials boosted investor hopes of policy support for a slowing economy.

At the close of trade, the Hang Seng index was up 274.88 points, or 0.97 percent, at 28,503.30, having lost 1.9 percent on Friday. The Hang Seng China Enterprises index rose 1.08 percent to 11,276.91.

The sub-index of the Hang Seng tracking energy shares rose 0.3 percent, the IT sector gained 2.3 percent, the financial sector ended 1.01 percent higher and the property sector rose 0.17 percent.

Gains were helped by cautious optimism among investors that Washington and Beijing will hammer out a deal to eliminate tariffs. A senior Chinese official said on Saturday that China and the United States were still working day and night to achieve a trade deal. But there remains little clarity on when the leaders from the two countries can meet to seal any deals.

Underscoring expectations that Beijing will continue to offer policy support in a slowing economy, People’s Bank of China (PBOC) Governor Yi Gang said on Sunday that the central bank’s “prudent” monetary policy would emphasise counter-cyclical adjustments, using a phrase that implies the need to fight an economic slowdown.

Yi said there was still some room for the PBOC to cut reserve requirement ratios, and that the bank would work on lowering risk premiums that have kept lending rates for small firms relatively elevated.

“The effectiveness of government policy stimulus has proven to be better than what the market had expected, as shown in Jan’s bank lending and Total Social Financing growth, and also in the improvement in Feb Caixin PMI … and new orders/business condition outlook of official PMI,” analysts at Morgan Stanley said in an note, noting that Chinese indexes, including the Hang Seng, had outperformed in the year to date.

Overall, the bias in prices is: Upwards.

The projected upper bound is: 29,355.87.

The projected lower bound is: 27,760.72.

The projected closing price is: 28,558.30.

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 5 white candles and 5 black candles. During the past 50 bars, there have been 32 white candles and 18 black candles for a net of 14 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 17.5271. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 8 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 53.81. 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 sell 9 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 -122.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 2 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 7 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed up 274.881 at 28,503.301. Volume was 12% below average (neutral) and Bollinger Bands were 39% narrower than normal.

Open High Low Close Volume___
28,265.85028,512.27028,240.77928,503.3011,572,716,288

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 28,744.48 27,481.74 27,582.30
Volatility: 15 19 23
Volume: 2,247,001,856 1,835,349,504 1,869,822,848

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 3.3% above its 200-period moving average and is in an upward 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 bullish on .HSI and have had this outlook for the last 37 periods.

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