Hong Kong: HANG SENG INDEX (.HSI) stocks slide for a second day as MTR retreated on train derailment

Hong Kong: HANG SENG INDEX (.HSI) stocks slide for a second day as MTR retreated on train derailment

Hong Kong: HANG SENG INDEX (.HSI) stocks slide for a second day as MTR retreated on train derailment

China’s stocks dropped by their most in 10 weeks on concern policymakers were not doing enough to arrest the decline in the nation’s economic growth, while a recent rally of smaller companies was judged to have been excessive. Hong Kong’s benchmark stock index also ended lower.

The Shanghai Composite Index sank 1.7 per cent to 2,978.12 at the close on Tuesday, the biggest one-day decline since July 8, while the ChiNext gauge of smaller firms retreated 2.1 per cent. The Hang Seng Index lost 1.2 per cent to 26,790.24 as the shares of subway operator MTR fell after one of its trains derailed for the first time in history.

While traders had anticipated aggressive China’s authorities to loosen monetary and fiscal policies following yesterday’s slew of August economic data that all missed forecasts, and were assessing the impact of soaring oil prices on corporate earnings, China’s central bank today refrained from lowering the rate on the medium-term lending facility (MLF). The funding tool for commercial lenders, via its open-market operation, was kept unchanged at 3.3 per cent.

A rout on China’s small-cap stocks added to the negative mood, as trades rushed to pocket their gains after a 20 per cent gain in the sector over the past three months made them five times as expensive as the benchmark gauge. The ChiNext index was valued at 72.1 times earnings, compared with the multiple of 14.7 times for the benchmark Shanghai Composite, according to Bloomberg data.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 27,639.80.

The projected lower bound is: 25,887.64.

The projected closing price is: 26,763.72.

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 24 white candles and 26 black candles for a net of 2 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 9 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 61.5029. This is not an overbought or oversold reading. The last signal was a sell 1 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 53.54. 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 21 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 43. This is not a topping or bottoming area. The last signal was a sell 1 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 20 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -334.311 at 26,790.240. Volume was 6% above average (neutral) and Bollinger Bands were 2% narrower than normal.

Open     High      Low     Close     Volume___
26,942.96126,951.84026,694.36926,790.2401,850,715,136
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 26,860.88 26,919.34 27,669.16
Volatility: 26 21 20
Volume: 1,864,506,240 1,643,257,088 1,796,176,128

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 3.2% 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 6 periods.

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