Shanghai: SSE Composite Index (.SSEC) gains capped by weak sentiment
Asian equities rose on Friday after the S&P 500 index notched a new record closing high, but investor sentiment remained fragile following weak data from China and Germany, which reinforced concerns about the global economy.
Early in the Asian trading day, MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.34%. Japan’s Nikkei added 0.58% and Australian shares gained 0.53%.
The safe-haven yen weakened, with the dollar rising 0.11% to buy 108.50 yen. The euro was unchanged at $1.1021 and the dollar index, which tracks the greenback against a basket of six major rivals was flat at 98.163.
Providing a fillip to investor confidence in Asia were comments from White House economic adviser Larry Kudlow that Washington was getting close to a trade agreement with China.
Higher U.S. Treasury yields also indicated a slight risk-on tone in the Asian session, with the 10-year yield rising to 1.8307% from a US close of 1.815% on Thursday.
The policy-sensitive two-year yield rose to 1.6036% from 1.593% on Thursday after U.S. Federal Reserve Chair Jerome Powell said the risk of the U.S. economy facing a dramatic bust is remote.
A Reuters poll of more than 100 economists showed that while concerns have eased over a U.S. recession, few see an economic rebound, and most believe a trade truce is unlikely in the coming year.
Global sentiment has been buffeted in recent weeks by conflicting assessments of progress in talks between the United States and China aimed at ending their 16-month-long trade war.
On Thursday, China’s commerce ministry said that the two countries are holding “in-depth” discussions on a first phase trade agreement, and that cancelling tariffs is an important condition to reaching a deal.
China has also ended a nearly five-year ban on imports of U.S. poultry meat, which the U.S. Trade Representative said would lead to more than $1 billion in annual shipments to China.
Those developments followed comments from officials from both countries last week that they had a deal to roll back tariffs, only to have U.S. President Donald Trump deny that any such deal had been agreed to.
The new record for the S&P, which gained just 0.08% to 3,096.63, came despite a grim outlook from network gear maker Cisco Systems that underlined the impact of trade uncertainty.
The company forecast second-quarter revenue and profit below expectations as increasingly global economic uncertainties kept clients away from spending more on its routers and switches, sending its shares down 7.3%.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 2,955.42.
The projected lower bound is: 2,827.28.
The projected closing price is: 2,891.35.
A black body occurred (because prices closed lower 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 27 white candles and 23 black candles for a net of 4 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. It then signifies that the momentum may be shifting from the bulls to the bears.
If the engulfing bearish pattern occurs during a downtrend (which appears to be the case with SSE COMPOSITE), 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 11.7942. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 12 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 37.68. 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 38 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 -108.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 4 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed down -18.527 at 2,891.343. Volume was 17% below average (neutral) and Bollinger Bands were 36% 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: 2,941.98 2,960.38 2,939.03
Volatility: 13 14 23
Volume: 14,811,743,232 16,834,276,352 23,102,904,320
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 1.6% below its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 bearish on .SSEC and have had this outlook for the last 27 periods.