Hong Kong: HANG SENG INDEX (.HSI) stocks fall on doubts over stimulus efforts against virus

Hong Kong: HANG SENG INDEX (.HSI) stocks fall on doubts over stimulus efforts against virus

Hong Kong: HANG SENG INDEX (.HSI) stocks fall on doubts over stimulus efforts against virus

Hong Kong stocks closed lower on Wednesday, tracking Asian markets that fell due to growing uncertainty over global policy efforts to arrest the economic loss from the coronavirus epidemic.

The Hang Seng index fell 0.6% to 25,231.61, while the China Enterprises Index lost 0.8% to 10,070.47.

Leading the retreat, the Hang Seng energy index and IT index dropped 3% and 1.6%, respectively.

The White House and Congress negotiated measures on Tuesday to shield the U.S. economy against the epidemic’s impact, although there was no immediate sign of a deal.

For the short term, correction risk still exists given the relatively strong “momentum effect” from a continued fall in the market, brokerage GF Securities said in report.

However, a firmer yuan and strong southbound flows from mainland investors offered a measure of support to Hong Kong stocks, the brokerage added.

On the day, mainland investors purchased a total of 6.5 billion yuan ($935.48 million) worth of Hong Kong stocks via the Stock Connect, as they hunted for bargains after the benchmark index hit a seven-month low on Monday amid a global selloff.

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 26,846.73.

The projected upper bound is: 25,376.94.

The projected lower bound is: 23,080.79.

The projected closing price is: 24,228.86.

Candlesticks

A black body occurred (because prices closed lower than they opened).
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 25 white candles and 25 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 8 falling windows in the last 50 candles–this makes the current falling window even more bearish.

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 15.2947. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a buy 10 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 27.02. 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 2 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 -190.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 7 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 13 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -922.539 at 24,309.070. Volume was 114% above average (neutral) and Bollinger Bands were 74% wider than normal.

Open     High      Low     Close     Volume___
24,657.67024,657.67024,117.93924,309.0703,748,928,512
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 25,781.67 27,369.17 27,121.11
Volatility: 39 27 22
Volume: 2,893,579,008 1,958,730,752 1,689,447,424

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 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 10.4% 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 31 periods. Our momentum oscillator is currently indicating that .HSI is currently in an oversold condition.

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