Shanghai: SSE Composite Index (.SSEC) fell from a 13-month high posting their worst session in nearly four weeks
China stocks fell from a 13-month high on Monday, posting their worst session in nearly four weeks, as comments from top policymaking bodies raised investor fears that Beijing will slow the pace of policy easing after some signs of stabilisation in the world’s second-largest economy.
The blue-chip CSI300 index fell 2.3 percent, to 4,025.61, while the Shanghai Composite Index skid 1.7 percent to 3,215.04, both logging their biggest single-day drop since March 25.
China will maintain policy support for the economy, which still faces “downward pressure” and difficulties after better-than-expected first-quarter growth, a top decision-making body of the Communist Party said on Friday.
But it also said authorities will try to strike a balance between stabilising economic growth, promoting reforms and controlling risks.
It added that China will push forward structural deleveraging and prevent speculation in the property market, suggesting attention may be turning back to debt risks that any further substantial stimulus measures may create.
The statement from the politburo came two days after China reported a steady 6.4 percent annual growth in January-March, defying expectations for a further slowdown, as industrial production jumped sharply and consumer demand showed signs of improvement. While analysts cautioned it was too early to call a turnaround, some market watchers lowered their expectations of further support measures.
The trend of marginal tightening in China’s monetary policy is quite clear, as the politburo mentioned “structural deleveraging” again and as the central bank drained liquidity via open market operations recently, said Shanxi Securities in report.
Corrections would happen going forward as the stock market returns to rationality, the brokerage added.
Investors still need to wait for the best time to buy stocks, as the pace of money flowing into the stock market could slow in the short-term due to Beijing’s counter-cyclical adjustments, CITIC Securities wrote in note.
“In the specific case of Sri Lanka, their contribution to the overall Asian market is still pretty small in terms of their influence, so we don’t expect a very large and long-lasting impact — but certainly for its own economy, the impact will be quite big,” Shayne Heffernan, CEO and Founder of Heffx, told Live Trading News on Monday.
Overall, the bias in prices is: Upwards.
Note: this chart shows extraordinary price action to the upside.
By the way, prices are vulnerable to a correction towards 2,972.51.
The projected upper bound is: 3,366.74.
The projected lower bound is: 3,087.22.
The projected closing price is: 3,226.98.
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 5 white candles and 5 black candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.
An engulfing bearish line occurred (where a black candle’s real body completely contains the previous white candle’s real body). The engulfing bearish pattern is bearish during an uptrend (which appears to be the case with SSE COMPOSITE). It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend, it may be a last engulfing bottom which indicates a bullish reversal. The test to see if this is the case is if the next candle closes above the bottom the current (black) candle’s real body.
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 74.6003. This is not an overbought or oversold reading. The last signal was a sell 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 58.57. 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 7 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 24. This is not a topping or bottoming area. The last signal was a sell 8 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 6 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed down -55.755 at 3,215.042. Volume was 31% above average (neutral) and Bollinger Bands were 35% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 3,229.07 3,028.65 2,759.92
Volatility: 21 30 27
Volume: 34,453,508,096 37,488,951,296 20,011,384,832
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 16.5% 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 63 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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