Shanghai: SSE Composite Index (.SSEC) Chinese equity market a beacon for rebound on global markets

Shanghai: SSE Composite Index (.SSEC) Chinese equity market a beacon for rebound on global markets

Shanghai: SSE Composite Index (.SSEC) Chinese equity market a beacon for rebound on global markets

China’s stock market staged a strong rebound from Friday’s massive sell-offs on Monday, which experts said could herald global markets’ recovery following last week’s rout on rising COVID-19 epidemic fears. 

The experts predict that China’s equities market, supported by the country’s strong economic fundaments, may in the coming months act as a global capital market stabilizer.

The Shanghai Composite Index surged 3.15 percent and stopped just short of the 3,000-point mark on Monday, reversing much of its loss on Friday when the market bent to pressure from panic sell-offs around the world.

As of Monday’s close, the combined turnover of the Shanghai and Shenzhen stock markets has exceeded 1 trillion yuan ($143.5 billion) for the ninth consecutive trading session.

How the US and European markets would go depends on the progress of the coronavirus outbreak, and corrections will happen again if the epidemic worsens further, Li said. 

“But the A-share markets will keep solid, not only because the coronavirus is on the wane in China but also because of A-shares’ lower valuations, the entrance of long-term investment capital and market expectations for a strong wave of policy stimulus,” Li said. 

An independent upward trend has been formed for A-shares and investors are confident that the COVID-19 outbreak won’t have a protracted impact on the Chinese economy in the long run, said Yang Delong, chief economist at Shenzhen-based First Seafront Fund Management Co.

Technical Indicators 

Overall, the bias in prices is: Sideways.

The projected upper bound is: 3,113.92.

The projected lower bound is: 2,830.15.

The projected closing price is: 2,972.04.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
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 32 white candles and 18 black candles for a net of 14 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 33.0398. This is not an overbought or oversold reading. The last signal was a sell 4 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 49.93. 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 buy 18 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 -35. This is not a topping or bottoming area. The last signal was a buy 0 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 0 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 90.627 at 2,970.931. Volume was 70% above average (neutral) and Bollinger Bands were 42% wider than normal.

Open     High      Low     Close     Volume___
2,899.3102,982.5072,899.3102,970.93136,733,337,600
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 2,990.50 2,996.46 2,941.13
Volatility: 32 31 21
Volume: 37,372,735,488 27,203,715,072 19,902,527,488

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 1.0% above 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 moderate flows of volume into .SSEC (mildly bullish). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 1 periods.

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