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Shanghai: SSE Composite Index (.SSEC) erased all its gains since Feb. 25

Shanghai: SSE Composite Index (.SSEC) erased all its gains since Feb. 25

Some investors are no longer holding out hope for a trade deal soon.

Jenna Barnard and John Pattulo, portfolio managers at Janus Henderson, say optimism among Chinese investors over a near-term resolution to the U.S.-China trade spat has withered in the span of a few weeks. They point to a chart showing how China’s Shanghai Composite index SHCOMP, +0.02%   has wiped out all its gains since President Donald Trump said the U.S. was “very, very close” to a trade deal.

His optimistic proclamation sent global equities flying higher on Feb. 25, with the Shanghai Composite climbing 5.60% on the day, according to Dow Jones Market Data.

But since the Trump administration threatened to raise tariffs on China in early May, prompting retaliatory levies from Beijing, expectations for a resolution to their trade spat have waned.

As much as U.S. markets have reeled from intensifying trade tensions, Chinese equity benchmarks have seen a more painful drop as investors have fled from Chinese stock-market funds.

China’s CSI 300 index 000300, +0.28%   is down around 8.2% and the Shanghai Composite is down 7.3% in May. This compared with a more subdued loss of around 3.6% in the S&P 500 SPX, +0.14% Still, all three indexes are still sitting on double-digit percentage gains for 2019.

Overall, the bias in prices is: Downwards.

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

By the way, prices are vulnerable to a correction towards 2,955.74.

The projected upper bound is: 2,990.23.

The projected lower bound is: 2,708.80.

The projected closing price is: 2,849.51.

Candlesticks

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 25 white candles and 25 black candles.

An inverted hammer occurred. If this occurs during a downtrend (which appears to be the case with SSE COMPOSITE) it implies a reversal. Look for a confirmation of the reversal on the bar.

A long upper shadow occurred. This is typically a bearish signal (particularly when it occurs near a high price level, at resistance level, or when the security is overbought).

A shooting star occurred (a shooting star has a small real body near the bottom of the candle and a long upper shadow). During an uptrend the long upper shadow indicates that the bears are gaining control and a top may occur.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 25.7859. This is not an overbought or oversold reading. The last signal was a sell 5 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 36.84. 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 10 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 -124.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a buy 10 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 27 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 0.479 at 2,852.995. Volume was 44% below average (neutral) and Bollinger Bands were 20% wider than normal.

Open High Low Close Volume___
2,847.8362,871.8552,846.0212,852.99516,720,548,864

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

Moving Averages: 10-period 50-period 200-period
Close: 2,893.78 3,065.67 2,775.90
Volatility: 23 30 28
Volume: 21,510,146,048 32,371,470,336 21,177,579,520

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 2.8% above its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect very strong flows of volume out of .SSEC (bearish). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 18 periods.

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