Hong Kong: Hang Seng Index (.HSI) selling pressure remains as trade war raises growth concerns
Hong Kong stock investors headed for the exit as economic woes, street protests and China’s weak yuan intensified worries over potential outflows from the city.
The MSCI Hong Kong Index closed 0.6% lower, its 10th straight decline a day after a general strike led to traffic chaos, violence, tear gas and flight cancellations in the city. The index pared an earlier loss of as much as 3.2%.
The last time Hong Kong stocks had such a long losing streak was June-July 1984, five months before the U.K. and China signed the Sino-British Joint Declaration for the handover of Hong Kong to China in 1997. A year earlier in 1983, the Hong Kong dollar had been pegged to the greenback.
The benchmark Hang Seng Index — which includes shares of Chinese companies earning in yuan — also pared an earlier decline to close down 0.7%. “The market is quite oversold after days of declines,” said Daniel So, CMB International Securities strategist in Hong Kong, adding that a rebound in U.S. index futures in the afternoon gave a lift to sentiment.
Hong Kong’s currency also reflected the sense of anxiety, falling the most in more than three-and-a-half years Monday before climbing as much as 22% Tuesday, the most since-mid-June, as the yuan recovered some ground.
Technology firms and developers were among the biggest decliners on the Hang Seng Index. Hang Lung Properties Ltd. fell 5.2% and AAC Technologies Holdings Inc. dropped 2.2%. A Bloomberg gauge of Macau casino stocks slid 1.6%, taking its nine-day loss to 16%.
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 27,810.88.
The projected upper bound is: 26,778.45.
The projected lower bound is: 25,118.92.
The projected closing price is: 25,948.69.
A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 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 7 falling windows in the last 50 candles–this makes the current falling window even more bearish. The two candles preceding the falling window were black, which makes this pattern even more bearish.
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 11.2425. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 11 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 20.70. This is where it usually bottoms. 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 41 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 -194.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 19 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 11 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed down -175.080 at 25,976.240. Volume was 57% above average (neutral) and Bollinger Bands were 60% wider 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: 27,615.86 27,908.44 27,591.50
Volatility: 19 19 22
Volume: 1,679,965,824 1,618,440,576 1,806,963,456
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 5.9% 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 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 6 periods. Our momentum oscillator is currently indicating that .HSI is currently in an oversold condition.
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