Hong Kong: HANG SENG INDEX (.HSI) makes its worst Lunar New Year debut since 2016
Hong Kong’s key stock index made its worst opening since 2016 on the first trading day of the Year of the Rat, as traders ran for cover after a two-day pause amid a worsening coronavirus outbreak.
The Hang Seng Index opened at 27,101, or 3 per cent below its close on January 24, the final trading day of the Year of the Pig. It finished Wednesday at 27,160.63, down 2.8 per cent. That makes it its worst opening since the Year of the Monkey in 2016, when the market opened 3.8 per cent lower.
Retail and airlines stocks were the biggest losers. Cosmetics retailer Sa Sa International Holdings dropped 9.1 per cent, while Chow Tai Fook Jewellery Group plunged 8.1 per cent, China Eastern Airlines fell 3.4 per cent and Cathay Pacific Airways moved 3.2 per cent lower.
The Year of the Rat, however, holds more promise on a full-year basis, with the exception of 2008 when the market dropped 46.4 per cent as investors panicked after the global financial crisis began to spread. The Hang Seng Index recorded a 221 per cent gain in 1972, 29.5 per cent in 1984 and 17.8 per cent in 1996. The benchmark was introduced in 1969.
During the 2003 severe acute respiratory syndrome (Sars) epidemic – to which comparisons are being drawn with the current outbreak – the benchmark fell 12 per cent the two months to end-March, at the height of the epidemic. The index rose 1 per cent on May 2, 2003 when the disease came under better control.
Notably, the Hong Kong market was not suspended during Sars either.
The mainland Chinese markets in Shanghai and Shenzhen have delayed their opening to Monday, February 3, instead of January 31, Friday, in tandem with an extended Lunar New Year public holiday ordered by China’s State Council.
The mainland markets were also closed during the Sars outbreak, after the China Securities Regulatory Commission extended the May Day public holiday until May 12, thus shortening trading by four days.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 28,077.16.
The projected lower bound is: 26,267.67.
The projected closing price is: 27,172.41.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A falling window occurred (where the bottom of the previous shadow is above the top of the current shadow). This usually implies a continuation of a bearish trend. There have been 6 falling windows in the last 50 candles–this makes the current falling window even more bearish.
A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).
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 11.6719. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 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 37.39. 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 16 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 -185.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 3 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 4 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed down -789.010 at 27,160.631. Volume was 46% above average (neutral) and Bollinger Bands were 4% narrower 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: 28,373.99 27,545.78 27,494.87
Volatility: 25 21 20
Volume: 1,583,205,504 1,497,825,408 1,665,148,416
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 gapped down today (bearish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
HANG SENG INDEX is currently 1.2% 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 0 periods.
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