Hong Kong: HANG SENG INDEX (.HSI) collapsed to new recent lows
The Chinese Hang Seng Index collapsed early this week to new recent lows. This breakdown in China’s major stock index highlights the anticipated fallout from the continued U.S./China trade war. Recent data from the Chinese property market and corporate bond markets suggest a broad slowdown in economic activity, which may surprise many foreign investors in the weeks/months to come.
Partner this continued economic weakness with the EU Elections and continued U.S./China trade issues and we almost have a perfect storm for commodities such as oil, copper and other industrial/transportation related shares. If the trade continues to collapse between the U.S./China while elections cause the general populations to “pause” traditional spending habits, it would suggest that we could see a continued breakdown in general commodity levels over the next 6-12+ months.
First, the Hang Seng index collapsed lower this week, prompting the U.S. and UK markets to breakdown as well. The continued rhetoric between the U.S. and China regarding the trade war is not helping the global economy. At this point, it’s like watching an old-school game of “chicken” – who flinches first.
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 28,446.19.
The projected upper bound is: 28,176.64.
The projected lower bound is: 26,496.24.
The projected closing price is: 27,336.44.
A black body occurred (because prices closed lower than they opened).
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.
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 black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 13.3507. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 7 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 28.86. 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 2 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 -116.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 2 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 23 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 86.799 at 27,353.930. Volume was 12% below average (neutral) and Bollinger Bands were 91% wider than normal.
Open High Low Close Volume___
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 27,893.44 29,134.52 27,489.86
Volatility: 16 18 22
Volume: 2,260,628,992 1,975,060,352 1,852,084,992
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 0.5% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. 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 12 periods. Our momentum oscillator is currently indicating that .HSI is currently in an oversold condition.