Hong Kong: HANG SENG INDEX (.HSI) optimism is fading
Optimism is fading over last week’s tentative trade truce between the United States and China.
Asian stocks were mixed Tuesday. Hong Kong’s Hang Seng Index (HSI) was flat. China’s Shanghai Composite Index (SHCOMP) dropped 0.5%. Both ended higher Monday.
South Korea’s Kospi (KOSPI) also opened slightly lower, though edged higher during morning early trading. On Monday, the index ended up 1.1%.
Japan’s Nikkei 225 (N225) was the region’s outlier: It advanced 1.7%, catching up to its global peers after being closed Monday for a holiday.
US futures, meanwhile, edged higher following a lower close on Wall Street overnight. Futures for the Dow (INDU), S&P 500 (SPX) and Nasdaq (COMP) all moved up 0.2% during Asian trading hours.
US President Donald Trump announced what he called a “very substantial phase one deal,” sparking hope for a resolution in the US-China trade war.
The preliminary agreement includes a halt on US tariff increases that were supposed to go into effect this week. Trump also told reporters that intellectual property, financial services and agricultural purchases are included in the agreement.
But the two sides still appear to be far from striking any sort of comprehensive deal, and the latest announcement doesn’t address some of the biggest rifts dividing the United States and China.
Separately, China’s consumer inflation reached its highest level in six years thanks to a surge in pork prices. The consumer price index rose 3% in September from the same period a year earlier, accelerating from a 2.8% increase in August, government statistics showed Tuesday. The reading was also higher than the 2.9% that analysts polled by Reuters expected.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 26,504.74.
The projected upper bound is: 27,348.86.
The projected lower bound is: 25,642.41.
The projected closing price is: 26,495.64.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with HANG SENG INDEX). It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
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 89.2729. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 9 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 55.34. 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 39 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 162.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 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 buy 1 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed down -17.920 at 26,503.930. Volume was 4% below average (neutral) and Bollinger Bands were 32% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 26,068.46 26,155.69 27,653.15
Volatility: 17 21 19
Volume: 1,532,380,032 1,741,119,360 1,785,715,072
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 4.2% 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 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 6 periods.