Shanghai: SSE Composite Index (.SSEC) China’s move to weaken the yuan suggests the level is no longer a line in the sand for policy makers in Beijing
US stock futures slumped with European stocks on Monday (Aug 5), tracking a sell-off across Asia after China struck back in its trade dispute with America and let its currency weaken through a milestone level. Treasuries led a global bond rally as investors dashed to safer assets.
The MSCI Asia Pacific Index sank 2.1 per cent, headed for the largest tumble in more than nine months.
Singapore shares plunged 2 per cent on yuan weakness and trade war escalation. The Straits Times Index (STI) lost 66.6 points or 2.04 per cent to close at 3,194.51.
The benchmark Shanghai Composite Index dropped 1.62 per cent, or 46.34 points, to close at 2,821.50. The Shenzhen Composite Index, which tracks stocks on China’s second exchange, lost 1.47 per cent, or 22.59 points, to close at 1,517.27.
China’s move to weaken the yuan suggests the level is no longer a line in the sand for policy makers in Beijing. Equities took another leg down after Bloomberg reported the Asian nation has asked state purchasers to halt imports of American agricultural products. Hong Kong shares were hit hardest as protesters moved to shut down the financial hub in widening social unrest.
Havens were in demand. Gold rallied and 10-year Treasury yields dropped to their lowest closing level since October 2016. European bonds advanced as data showed economic activity in the euro area’s private sector weakened further, while the yield on 10-year UK gilts fell to a record low.
After a dramatic session in Asia, all focus will now be on whether US President Donald Trump responds to the Monday news about China’s exchange-rate. In the past he has criticized the Asian nation for allegedly manipulating the yuan for competitive advantage in exports. Wall Street has also speculated about the potential for the Trump administration to intervene to cap dollar gains, though White House economic adviser Larry Kudlow on Friday ruled that out.
The yuan’s drop was the biggest since August 2015, when officials announced a surprise devaluation that roiled global markets. The People’s Bank of China said that it is able to keep the currency stable and at a reasonable level, and that the yuan broke above 7 per dollar because of trade protectionism.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 2,904.68.
The projected lower bound is: 2,737.05.
The projected closing price is: 2,820.87.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
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 7.2665. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 3 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 31.88. 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 60 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 -215.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. 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 sell 1 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed down -46.342 at 2,821.496. Volume was 30% below average (neutral) and Bollinger Bands were 54% narrower than normal.
Open High Low Close Volume___
Short Term: Oversold
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 2,912.91 2,929.37 2,822.27
Volatility: 15 18 26
Volume: 14,816,423,936 18,415,740,928 22,715,492,352
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.
SSE COMPOSITE is currently 0.0% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. 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 14 periods.