Hong Kong: HANG SENG INDEX (.HSI) Touches 5-Month High in Otherwise Lackluster Trading Week
The major Asia Pacific shares finished mostly higher last week, but gains were mixed due to the lack of fresh news over the U.S.-China trade deal, and low holiday trading volume. Traders remained optimistic about the trade agreement, but were still worried about the details in the pact, and when and where it would be signed.
For the week, Japan’s Nikkei 225 Index settled at 23837.72, up 21.09 or +0.09%. In South Korea, the KOSPI Index finished at 2204.21, up 0.03 or +0.00% and in Hong Kong, the Hang Seng Index closed at 28225.42, up 354.07 or 1.27%.
China’s Shanghai Index settled at 3005.04, up 0.10 or +0.00% and Australia’s S&P ASX 200 Index finished at 6821.70, up 5.40 or +0.08%.
Shanghai Composite Index Plunges then Recovers
Mainland Chinese stocks tumbled on Monday following the announcement that China will cut import tariffs on a wide range of goods. China’s finance ministry announced starting January 1, it will lower import tariffs on over 850 products ranging from frozen pork to some types of semiconductors.
“The move is not linked to U.S.-China trade tensions, instead it is seen as a combination of a need from China to lower costs on import necessities such as pork and medicine, while also aimed at showing a willingness to open its economy to the rest of the world,” Rodrigo Catril, senior foreign exchange strategist at National Australia Bank, wrote in a note.
Despite starting out weaker, the Shanghai Composite Index was able to recover from its losses to finish marginally higher.
US-China Trade: Investors Optimistic, but Worried About Details
Market sentiment continued to be boosted last week by the mid-December announcement of Phase One of a U.S.-China trade deal. At the end of the week, the two economic powerhouses were in the midst of translating the deal, with the aim of signing it in early January.
In a regular press briefing on Thursday, the Chinese Commerce Ministry said China is in close touch with the U.S. on signing the initial trade pact. That came after U.S. President Donald Trump said Tuesday the deal is “getting done,” adding there will be a signing ceremony with Chinese leader Xi Jinping.
Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, sounded a little optimistic about the deal in a note on Thursday saying, “China has been lukewarm about the trade agreement, expressing less enthusiasm than the US but (Thursday’s) comments is the strongest confirmation to date that there will be no reneging on the deal.”
Nonetheless there was still some pessimism in the air with Adams Asset Management’s Brock Silvers urging caution over the lack of details so far regarding the deal.
“It’s a bit strange that we have an agreement that everyone is trying to celebrate but no one wants to really tell me what’s in it,” Silvers, who is managing director at the firm, told CNBC’s “Squawk Box” on Friday. “I think the market can put up with that for a bit, we can be patient…but after next week…I think there will be some questions.”
Hang Seng Index Jumps to 5-Month High
Hong Kong stocks closed at a five-month peak as investors cheered a rebound in China’s industrial profits for November. The benchmark Hang Seng index ended up at its highest closing level since July 26.
Profits at industrial firms in November grew at the fastest pace in eight months, breaking a three-month losing streak, as production and sales quickened, but broad weakness in domestic demand remains a risk for earnings next year.
Another factor driving the markets was a Reuters report that said China had called on its biggest state firms to take a more active role in Hong Kong, including stepping up investment and asserting more control of companies in the financial hub.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 27,162.88.
The projected upper bound is: 29,060.81.
The projected lower bound is: 27,452.47.
The projected closing price is: 28,256.64.
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 26 white candles and 24 black candles for a net of 2 white candles.
A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 7 rising windows in the last 50 candles–this makes the current rising window even more bullish.
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 79.4843. This is not an overbought or oversold reading. The last signal was a sell 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 69.00. 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 33 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 91. This is not a topping or bottoming area. The last signal was a sell 3 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 buy 9 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 361.209 at 28,225.420. Volume was 12% below average (neutral) and Bollinger Bands were 50% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 27,758.58 26,994.02 27,561.99
Volatility: 18 19 19
Volume: 1,490,644,992 1,477,768,448 1,701,886,336
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 gapped up today (bullish) 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 2.4% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 7 periods.
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