Hong Kong: HANG SENG INDEX (.HSI) Gains Capped by US-China Trade Worries

Hong Kong: HANG SENG INDEX (.HSI) Gains Capped by US-China Trade Worries

Hong Kong: HANG SENG INDEX (.HSI) Gains Capped by US-China Trade Worries

The major Asia Pacific stock indexes closed mixed on Tuesday, but mostly higher as investors appeared to shrug off concerns over the progress of U.S.-China trade negotiations. Shares in Hong Kong continued to gain back last week’s losses amid optimism over fresh government stimulus. Aussie shares were supported by the possibility of lower rates after central bank minutes showed policymakers discussed being more accommodative.

Japan’s Nikkei 225 Index settled at 23292.65, down 124.11 or -0.53%. Hong Kong Hang Seng Index finished at 27093.80, up 412.71 or 1.55% and South Korea’s KOSPI Index closed at 2153.24, down 7.45 or -0.34%.

China’s Shanghai Index settled at 2933.99, up 24.79 or +0.85% and Australia’s S&P/ASX 200 Index finished at 6814.20, up 47.40 or +0.70%.

Gains Capped by US-China Trade Worries

Gains in the Asia Pacific indexes were likely capped by overnight developments around U.S.-China trade negotiations. This was also evident on Wall Street where the major indexes reached all-time highs early in the session on Monday, but retreated to the middle of the range into the close.

Investors are reacting to a report from CNBC’s Eunice Yoon, who wrote on Monday, citing a government source, that Beijing is pessimistic about the trade deal. China is concerned after U.S. President Donald Trump said there would be no tariff rollback, Beijing had thought both parties had agreed in principle, Yoon reported.

Official Comments versus Unnamed Government Sources

Although this news may be putting a lid on prices, some are ignoring the headline, and instead remain focused on official comments.

“Our preference remains on putting more weight on comments coming directly from officials dealing with the trade negotiations and on this score there is nothing to contradict the view that the US and China are still working towards striking a deal,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a note.

Hang Seng Up Sharply for Second Session

Hong Kong’s Hang Seng Index rose sharply for a second session this week on the hopes of fresh government stimulus and the news that Alibaba will close its order books to institutional investors early for its upcoming secondary listing in Hong Kong, a sign that demand for shares is strong, two sources with direct knowledge of the matter told CNBC.

The e-commerce giant will close its book at 12 p.m. ET on Tuesday, earlier than initially planned, the sources, who wished to remain anonymous because they are not authorized to speak publicly, said.

“The book is well-covered,” one source said. “The international offering received strong feedback.”

Alibaba got the greenlight from Hong Kong regulators for the secondary listing last week, CNBC previously reported.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 27,644.39.

The projected lower bound is: 26,143.15.

The projected closing price is: 26,893.77.

Candlesticks

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 23 white candles and 27 black candles for a net of 4 black candles.

A bearish harami occurred (where the current small black body is contained within an unusually large white body). During an uptrend this pattern implies an end to the rally as the bulls appear to have exhausted themselves.

During a downtrend (which appears to be the case with HANG SENG INDEX) the bearish harami pattern is bullish as the bulls appear to be gaining strength as the bears weaken.

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.

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 77.3872. This is not an overbought or oversold reading. The last signal was a buy 1 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 50.73. 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 8 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 -31. This is not a topping or bottoming area. The last signal was a buy 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 5 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -204.191 at 26,889.609. Volume was 17% below average (neutral) and Bollinger Bands were 14% narrower than normal.

Open     High      Low     Close     Volume___
26,936.78926,962.17026,804.35026,889.6091,333,243,648
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 26,937.65 26,668.24 27,733.98
Volatility: 24 18 19
Volume: 1,480,780,672 1,536,131,072 1,761,119,360

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 3.0% below 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 14 periods.

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