Hong Kong: HANG SENG INDEX (.HSI) optimism over U.S.-China trade talks and a new deal to avoid a government shutdown
Investors were caught by surprise by a report showing that U.S. retail sales fell by 1.2% in December, the largest single-month decline since 2009 and well below the flat growth expected by economists polled by MarketWatch. That came at the same time that jobless claims showed an unexpected rise in the number of Americans applying for unemployment benefits.
Stock-index futures had risen ahead of those numbers amid optimism over U.S.-China trade talks and a new deal to avoid a government shutdown. Reports had indicated that President Donald Trump may extend the tariff truce with Beijing by another 60 days if a trade deal appears near, Bloomberg News reported.
Trump has described talks, among the biggest concerns for market participants, as going “very well.” However, some observers are expecting only a limited trade deal to come to fruition, particularly if a March deadline isn’t extended.
Meanwhile, Trump was expected to sign border-security legislation, which would avert a partial government shutdown.
Earlier, reports on Japanese gross domestic product matched market expectations, while Chinese exports and imports were better than expected, as German growth numbers stagnated, painting a mixed picture of the state of the international economy.
The U.S. producer-price index fell by 0.1% in January, lower than the 0.1% increase expected by economist polled by MarketWatch.
Business inventories dropped 0.1% in November, according to a report delayed by the partial government shutdown.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 27,277.77.
The projected upper bound is: 29,347.32.
The projected lower bound is: 27,586.76.
The projected closing price is: 28,467.04.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 9 white candles and 1 black candles for a net of 8 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 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 white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 93.0940. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 5 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 74.02. This is where it usually tops. 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 sell 4 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 118.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 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 24 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed down -65.539 at 28,432.051. Volume was 16% below average (neutral) and Bollinger Bands were 3% narrower than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 28,022.91 26,663.22 27,751.28
Volatility: 9 21 23
Volume: 1,661,398,912 1,692,113,920 1,828,062,464
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 2.5% above its 200-period moving average and is in an upward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .HSI (mildly bullish). Our trend forecasting oscillators are currently bullish on .HSI and have had this outlook for the last 20 periods. Our momentum oscillator is currently indicating that .HSI is currently in an overbought condition.