Shanghai: SSE Composite Index (.SSEC) fears haunting China’s markets

Shanghai: SSE Composite Index (.SSEC) fears haunting China’s markets

Shanghai: SSE Composite Index (.SSEC) fears haunting China’s markets

Fears about the stability of China’s economy in light of stock and currency fluctuations has prompted a Chinese government-backed think tank to warn of “potential financial panic”, according to a leaked document that began circulating late last week.

In the document, the Beijing-based National Institution for Finance & Development (NIFD) warned the world’s second-largest economy could be headed for danger as bond defaults, liquidity shortages and a recent plunge in financial markets take their place alongside increasing trade tensions with the United States.

The benchmark Shanghai Composite Index has fallen over 20% since January, leaving the country in a technical bear market. The index is at its lowest level since May 2016, having been at a two-year high earlier in the year.

The Chinese yuan has also suffered, losing over 6% since March to sit at its weakest level since late 2017.

The document outlined that China should be ready to introduce a mix of fiscal and financial sector measures to avert a systemic crisis and, in the event that a major default roils markets, authorities should be ready to step in with financial support.

“China’s State Council should be ready to implement any market support measures in co-ordination with the central bank and other regulators, key government ministries and the police,” the NIFD added.

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 3,042.30.

The projected upper bound is: 2,941.10.

The projected lower bound is: 2,744.96.

The projected closing price is: 2,843.03.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black 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 21.2744. This is not an overbought or oversold reading. The last signal was a buy 0 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 32.39. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 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 -79. 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 24 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 60.522 at 2,847.418. Volume was 14% below average (neutral) and Bollinger Bands were 76% wider than normal.

Open High Low Close Volume___
2,789.8112,848.3722,782.3812,847.41812,567,168,000

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

Moving Averages: 10-period 50-period 200-period
Close: 2,876.24 3,071.01 3,269.49
Volatility: 28 21 17
Volume: 14,211,920,896 13,528,467,456 16,778,022,912

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 12.9% below 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 moderate flows of volume out of .SSEC (mildly bearish). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 20 periods.

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