Hong Kong: HANG SENG INDEX (.HSI) may have pockets of opportunity

Hong Kong: HANG SENG INDEX (.HSI) may have pockets of opportunity

Hong Kong: HANG SENG INDEX (.HSI) may have pockets of opportunity

Those hoping the upcoming earnings season will give some respite to tumultuous Asian stock markets might be in for disappointment.

Analysts and strategists have been trimming their expectations for companies in the MSCI Asia Pacific Index, in direct contrast to firms from Europe and the U.S., where estimates are still rising. Early results from Japan are pointing to a bleak picture.

In less than a month, analysts have lowered their 12-month profit projections for members of the Asian index by 17 cents to $13.18 a share. They have plenty of reasons to chose from:

  • Global trade tensions — while Chinese equities are poised to suffer the most, those in Japan and Southeast Asia, where companies are part of regional supply chains, won’t be spared either
  • Faster-than-expected rate hikes in Indonesia, the Philippines and Malaysia are likely to weigh on companies’ borrowing costs
  • Rising crude prices might hurt Indian importers of oil, just as a stronger U.S. dollar is making commodities in general more costly
  • Then there’s concerns over economic growth — purchasing manager index readings from China and Japan, as well as South Korea’s export data, sent shares into a funk on Monday
  • And weak currencies: the Indian rupee, Philippine peso and Indonesia’s rupiah are some of the world’s biggest emerging-market losers this year, which raises the cost of servicing dollar-denominated debt even as it provides a fillip to exporters

Pockets of Opportunity

Of course, it isn’t all bad for the upcoming season. Morgan Stanley expects strong first-quarter profit for retail banks in India, according to a report on July 2. Goldman Sachs Group Inc. sees Hong Kong lenders beating estimates and propelling their stocks higher.

Singapore and New Zealand may be beacons of hope as their earnings estimates over the next 12 months are still on the rise, data compiled by Bloomberg show. Andrew Chow, an analyst at UOB Kay Hian, wrote in a June report that earnings will grow more than 10 percent at Singaporean companies this year, driven mainly by banks.

It’s such an opaque situation at the moment, that’s why you’re seeing this pressure in the markets and liquidity is just being sucked out from what’s happening.

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 29,903.31.

The projected upper bound is: 29,116.07.

The projected lower bound is: 27,158.66.

The projected closing price is: 28,137.37.

Candlesticks

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 24 white candles and 26 black candles for a net of 2 black 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 36.4773. This is not an overbought or oversold reading. The last signal was a buy 3 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 30.98. 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 3 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 -107.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 1 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 13 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -59.580 at 28,182.090. Volume was 6% below average (neutral) and Bollinger Bands were 94% wider than normal.

Open High Low Close Volume___
28,101.85028,320.90027,830.75028,182.0901,937,726,336

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 28,725.56 30,267.27 29,979.20
Volatility: 19 21 21
Volume: 2,454,221,824 2,019,655,424 2,171,753,728

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 6.0% below its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 11 periods. The security price has set a new 14-period low while our momentum oscillator has not. This is a bullish divergence.

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