Hong Kong: HANG SENG INDEX (.HSI) stock market rally as tapering new cases of coronavirus spur traders to hunt for bargains after Monday’s sell-off
Asian stock markets recovered from Monday’s rout as traders returned to hunt for bargains in the belief that the panic sell-off a day earlier had been overdone.
Benchmark indexes rose in 11 of 19 stock markets in the Asia-Pacific region as of 1:30pm, according to Bloomberg data, including in Japan, South Korea, Hong Kong, Shanghai and Shenzhen.
Traders took comfort in signs that the coronavirus outbreak appears to be easing in Asia – even as new cases and deaths have soared in North America and Europe – leading them to believe that the dampening effect on the financial markets and economies would only be temporary. The Chinese president Xi Jinping even visited Wuhan, his first to the Hubei provincial capital ever since the infectious disease was first reported in January.
“Some investors … believe the virus outbreak will only affect the market for one to three months,” said Everbright Sun Hung Kai’s wealth management strategist Kenny Wen, adding that Hong Kong’s 4.2 per cent plunge on Monday had been oversold. “They plan to bottom fish, [now that] the Hang Seng Index dropped 1,700 points in just two days.”
Hong Kong’s benchmark Hang Seng Index jumped by as much as 2.2 per cent, while the H-shares index advanced 2.6 per cent in its biggest intraday gain since February 6. Of the 50 constituents on the Hang Seng, 49 stocks advanced.
Alibaba Group Holding, Asia’s largest company by capitalisation and owner of South China Morning Post, gained by as much as 3.4 per cent, recovering some of the losses from a day earlier. Tencent Holdings, China’s largest games publisher and the biggest component on the Hang Seng, advanced by 2.8 per cent, contributing to 13 per cent of the benchmark index’s gains.
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 26,997.59.
The projected upper bound is: 26,448.16.
The projected lower bound is: 24,237.99.
The projected closing price is: 25,343.08.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
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 14.3808. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 8 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 34.21. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 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 -149.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 5 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 up 352.049 at 25,392.510. Volume was 88% above average (neutral) and Bollinger Bands were 50% 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: 26,175.11 27,509.25 27,146.51
Volatility: 35 26 21
Volume: 2,670,875,904 1,887,108,992 1,677,649,408
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 6.5% 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 29 periods.
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