Hong Kong: HANG SENG INDEX (.HSI), Shanghai stocks slip despite US boost

Hong Kong: HANG SENG INDEX (.HSI), Shanghai stocks slip despite US boost

Hong Kong: HANG SENG INDEX (.HSI), Shanghai stocks slip despite US boost

Hong Kong and Shanghai stocks ended with losses on Wednesday as an early rally fuelled by US economic support gave way to longstanding worries about the economic impact of the coronavirus outbreak.

Hong Kong’s Hang Seng Index lost 0.6 percent, to 25,231.

On the mainland, the Shanghai Composite Index fell 0.9 percent, to 2,968 and the Shenzhen Composite Index shed 1.5 percent, to 1,859.

Tokyo and Seoul ended more than 2 percent down.

Sydney sank 3.6 percent, putting it into a bear market – a drop of at least 20 percent from a recent high – just two weeks after hitting a record. The index has several firms that rely on trade with China, while energy stocks have also been hammered by the oil rout.

Singapore and Taipei each lost at least 1 percent. Bangkok, Wellington and Jakarta were also lower, though Manila and Mumbai eked out small gains.

“Expectations for a ‘major’ fiscal stimulus package by the US government have underpinned sentiment – even if the volatility suggests the market still needs a bit of coaxing,” said AxiCorp’s Stephen Innes.

“Indeed, investors were in desperate need of leadership from policymakers. Central banks can do their bit, but in times of viral cataclysm, it’s governments that must be seen as in charge of the proceedings … Trump’s actions evidenced how little it takes for markets to respond favourably.”

Technical Indicators

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 26,940.26.

The projected upper bound is: 26,263.57.

The projected lower bound is: 24,079.90.

The projected closing price is: 25,171.73.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 26 white candles and 24 black candles for a net of 2 white 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. It then signifies that the momentum may be shifting from the bulls to the bears.

If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with HANG SENG INDEX), 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 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 14.7074. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 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 32.99. 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 1 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 -135.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 6 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 12 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -160.900 at 25,231.609. Volume was 52% above average (neutral) and Bollinger Bands were 55% wider than normal.

Open     High      Low     Close     Volume___
25,459.96125,493.23025,140.38125,231.6092,627,625,728
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 26,028.62 27,449.37 27,136.33
Volatility: 35 26 21
Volume: 2,729,723,136 1,912,161,152 1,679,347,328

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 7.0% 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 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 30 periods.

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