Hong Kong: HANG SENG INDEX (.HSI) stocks drop as IMF flags deep global recession

Hong Kong: HANG SENG INDEX (.HSI) stocks drop as IMF flags deep global recession

Hong Kong: HANG SENG INDEX (.HSI) stocks drop as IMF flags deep global recession

Hang Seng index ends down 1.19%

Hong Kong’s benchmark share index ended lower on Wednesday as forecast of a deep recession this year by the International Monetary Fund outweighed a monetary stimulus from China’s central bank. **

At the close of trade, the Hang Seng index was down 290.06 points, or 1.19%, at 24,145.34. The Hang Seng China Enterprises index fell 1.25% to 9,724.7. **

The sub-index of the Hang Seng tracking energy shares dipped 3.8%, while the IT sector rose 0.32%, the financial sector ended 1.37% lower and the property sector dipped 1.52%.

The coronavirus pandemic is expected to lead to the worst global recession since the 1930s, the International Monetary Fund said on Tuesday, with Hong Kong’s economy likely to shrink by 4.8% this year.

Worries over the economic outlook outweighed a move by China’s central bank to combat the economic fallout from the coronavirus health crisis.

The People’s Bank of China on Wednesday cut the interest rate on its medium-term lending facility (MLF) for financial institutions by 20 basis points to 2.95%, a record low, in an attempt . More easing is widely expected to help struggling companies get back on their feet.

The top gainer on the Hang Seng was Shenzhou International Group Holdings Ltd, which added 2.81%, while the biggest loser was CNOOC Ltd, which fell 5.18%.

China’s main Shanghai Composite index closed down 0.57% at 2,811.17 points, while the blue-chip CSI300 index ended down 0.74%.

Around the region, MSCI’s Asia ex-Japan stock index was weaker by 0.47%, while Japan’s Nikkei index closed down 0.45%.

The yuan was quoted at 7.0632 per U.S. dollar at 08:22 GMT, 0.26% weaker than the previous close of 7.0452.

Technical Indicators

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

The projected upper bound is: 25,517.74.

The projected lower bound is: 22,521.97.

The projected closing price is: 24,019.86.

Candlesticks

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 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 6 falling windows in the last 50 candles–this makes the current falling window even more bearish.

A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.

A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend (which appears to be the case with HANG SENG INDEX) it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend it is called a bullish hammer.

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).

An on-neck line occurred. This is a bearish pattern where prices should move lower when the white candlestick’s (i.e., the most recent) low is penetrated.

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.

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 61.1165. 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 49.45. 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 15 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 50. This is not a topping or bottoming area. The last signal was a sell 0 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 buy 13 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -73.400 at 24,071.939. Volume was 80% below average (consolidating) and Bollinger Bands were 2% wider than normal.

Open High Low Close Volume___
24,025.44924,086.50023,854.78924,071.939 428,207,968
Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 23,852.78 25,202.89 26,636.93
Volatility: 27 40 27
Volume: 1,963,208,576 2,549,846,784 1,811,942,144

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 gapped down today (bearish) on light volume. Possibility of a Common Gap which usually coincides with a lack of interest in the security. Common Gaps are fairly irrelevent for forecasting purposes. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
HANG SENG INDEX is currently 9.6% below its 200-period moving average and is in an upward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .HSI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .HSI and have had this outlook for the last 2 periods.

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