Shanghai: SSE Composite Index (.SSEC) benchmark index rises above 3,000 for first time in a month

Shanghai: SSE Composite Index (.SSEC) benchmark index rises above 3,000 for first time in a month

Shanghai: SSE Composite Index (.SSEC) benchmark index rises above 3,000 for first time in a month

China stocks rose on Monday, with the benchmark Shanghai Composite Index going past the 3,000 level for the first time in nearly a month amid expectations of trade deal between presidents Xi Jinping and Donald Trump next month. A strengthening yuan acted as a catalyst.

The Shanghai index rose 1.2 per cent to 3,007.88 ” it’s highest level since September 16, while the CSI 300 Index of blue chips listed on Shenzhen and Shanghai gained 1.1 per cent to 3,953.254.

In Hong Kong, the Hang Seng closed higher for a third straight session. The index added 0.8 per cent to 26,521.85, its highest level since September 18.

Alvin Cheung, associate director at Prudential Brokerage, said that mainland-listed stocks got a boost from a strengthening yuan, which rose to 7.0611 against the US dollar on Monday.

Bank of America Merrill Lynch said that it has revised its year-end forecast for the yuan to 7.3 per US dollar, from 7.5 previously.

“Expectation in the market is rising that China’s central bank is unlikely to allow the yuan to continue to weaken further as we go into the next meeting between the two presidents, as the proposed official deal could be signed at the APEC summit on November 16-17 [in Chile],” said Cheung.

The yuan’s rise came despite weaker trade data from China on Monday. Exports fell for the second straight month in September, as the trade war with the US continued to hit its economy. Shipments fell by 3.2 per cent year on year, worse than the 2.8 per cent expectation from analysts polled by Bloomberg.

In Shanghai, banks powered the index higher. ICBC rose 1.42 per cent to 5.72 yuan, China Everbright Bank jumped 6.7 per cent to 4.6 yuan and Agricultural Bank of China added 0.9 per cent to 3.56 yuan.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 3,082.58.

The projected lower bound is: 2,935.72.

The projected closing price is: 3,009.15.

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 30 white candles and 20 black candles for a net of 10 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 5 rising windows in the last 50 candles–this makes the current rising window even more bullish.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 90.3612. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 60.93. 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 14 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 109.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 2 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 12 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 34.228 at 3,007.883. Volume was 15% above average (neutral) and Bollinger Bands were 16% narrower than normal.

Open     High      Low     Close     Volume___
2,993.9623,026.3832,989.8133,007.88320,861,480,960
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 2,947.49 2,915.93 2,889.47
Volatility: 14 16 23
Volume: 15,309,493,248 17,637,552,128 23,011,340,288

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

SSE COMPOSITE 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.
SSE COMPOSITE is currently 4.1% above its 200-period moving average and is in an downward 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 .SSEC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 3 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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