Shanghai: SSE Composite Index (.SSEC) Change in Government Policy Pressuring Chinese Markets

Shanghai: SSE Composite Index (.SSEC) Change in Government Policy Pressuring Chinese Markets

Shanghai: SSE Composite Index (.SSEC) Change in Government Policy Pressuring Chinese Markets

Mainland Chinese shares were lower for a second day on Tuesday as investors continued to react to a South China Morning Post report that Beijing could refocus on structural reforms instead of offering stimulus measures after last week’s first quarter GDP report showed better-than-expected economic growth.

The report also said that China’s senior communist leaders have congratulated themselves on saving the country’s economy from a hard landing during a trade war with the United States and have decided to focus on “structural reforms”, instead of stimulus, to move the economy forward.

The Politburo, the 25-member ruling body of the country headed by President Xi Jinping, reviewed China’s growth in the first quarter on Friday and concluded that market confidence has returned and economic performance was “better than expected”, the official Xinhua news agency reported.

If you recall, last week, China reported that its gross domestic product expanded by 6.4 percent in the first quarter of this year, exceeding most estimates and remaining at the top end of China’s target growth range of 6.0-6.5 percent for 2019, although many incentives, including a cut in value-added taxes, were yet to take effect.

Investors reacted to the news by selling shares because of disappointment in the news. Stimulus measures tend to have an immediate impact on the economy and stocks, while structural reforms tend to take longer to work their way through the economy.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

The projected upper bound is: 3,349.37.

The projected lower bound is: 3,069.61.

The projected closing price is: 3,209.49.

Candlesticks

A black body occurred (because prices closed lower 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 30 white candles and 20 black candles for a net of 10 white candles.

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 56.0657. 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 56.24. 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 8 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 -70. This is not a topping or bottoming area. The last signal was a sell 9 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 7 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed down -16.449 at 3,198.594. Volume was 21% above average (neutral) and Bollinger Bands were 26% wider than normal.

Open High Low Close Volume___
3,211.8723,231.5823,186.7573,198.59432,836,120,576

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 3,224.97 3,039.54 2,761.85
Volatility: 21 30 26
Volume: 34,095,421,440 37,835,878,400 20,110,854,144

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 is currently 15.8% above 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 .SSEC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .SSEC and have had this outlook for the last 64 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.

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