Hong Kong: HANG SENG INDEX (.HSI) poised for continued upbeat momentum
China’s stocks posted their best monthly performance in January in a year, as the world’s biggest emerging equity market recovered from the world-beating decline in 2018.
The Shanghai Composite Index rose 3.6 per cent last month, the biggest gain since January 2018. Equities were buoyed by beaten down valuations, detente in the China-US trade friction and the prospects of inflows from foreign investors.
While most strategists made the call that China’s stocks would bounce back late in the year, the rebound is already in full swing. Foreign buying can account for part of the gains, as overseas traders buy before a decision by MSCI on whether to triple the weightings of Chinese stocks in its global gauges by the end of the month.
Foreigners bought a net of 66.4 billion yuan (US$9.85 billion) of the mainland-traded stocks in January through the exchange link programme with the Hong Kong bourse.
Traders have also temporarily looked past the trade dispute between China and the US, ahead of a 90-day truce that ends on March 1. A high-level talk that concluded last week in Washington appeared to be positive, with China promising to increase imports of American goods and the US saying progress had been made.
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 26,911.09.
The projected upper bound is: 28,927.48.
The projected lower bound is: 27,133.69.
The projected closing price is: 28,030.59.
A white body occurred (because prices closed higher 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 28 white candles and 22 black candles for a net of 6 white candles.
A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).
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 78.8363. This is not an overbought or oversold reading. The last signal was a sell 0 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 71.03. 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 buy 77 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 112.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 9 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 19 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 59.471 at 27,990.211. Volume was 53% below average (consolidating) and Bollinger Bands were 3% wider 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: 27,531.87 26,466.16 27,803.96
Volatility: 12 22 23
Volume: 1,711,452,288 1,662,029,056 1,836,049,408
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 0.7% 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 15 periods. Our momentum oscillator is currently indicating that .HSI is currently in an overbought condition.
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