Hong Kong: HANG SENG INDEX (.HSI) stocks end higher on stimulus hopes
The Hang Seng index rose 0.6% to 26,291.68, while the China Enterprises Index gained 1.8% to 10,485.17 points.
The HSCE, an index tracking mainland firms, outperformed as downbeat data reinforced expectations of further stimulus to support China’s economy.
Factory activity in China contracted at the fastest pace ever in February, even worse than during the global financial crisis, highlighting the colossal damage from the virus outbreak on the world’s second-largest economy.
China’s official Purchasing Managers’ Index (PMI) fell to a record low of 35.7 in February from 50.0 in January, the National Bureau of Statistics said on Saturday, well below the 50-point mark that separates monthly growth from contraction.
On Monday, a private survey showed China’s factories were dealt a devastating blow in February as the coronavirus epidemic triggered the sharpest contraction in activity on record, with the health crisis paralyzing large parts of the economy.
Adding to sentiment was fewer new virus cases in the country.
China’s central Hubei province, the epicenter of the country’s coronavirus outbreak, reported less than 200 cases of new infections for the first time since January.
Excluding the new infections in Hubei, there were only six new cases in mainland China, the lowest since last month.
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 27,263.28.
The projected upper bound is: 27,213.28.
The projected lower bound is: 25,321.43.
The projected closing price is: 26,267.35.
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.
An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with HANG SENG INDEX). It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.
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 25.8100. This is not an overbought or oversold reading. The last signal was a buy 2 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 35.67. 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 sell 39 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 -118.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -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 sell 5 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 161.750 at 26,291.680. Volume was 36% above average (neutral) and Bollinger Bands were 1% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 26,971.48 27,735.57 27,205.44
Volatility: 19 22 20
Volume: 1,993,063,168 1,712,705,536 1,657,461,888
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 3.4% below its 200-period moving average and is in an downward 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 bearish on .HSI and have had this outlook for the last 23 periods.