Shanghai: SSE Composite Index (.SSEC) Holding Key Support

Shanghai: SSE Composite Index (.SSEC) Holding Key Support

Shanghai: SSE Composite Index (.SSEC) Holding Key Support

The Shanghai Composite is a capitalization-weighted index like our own S&P 500 Index. This index tracks the daily price performance of all A- and B-shares listed on the Shanghai Stock Exchange. The index was developed back on Dec. 19, 1990, with a base value of 100. The index has had a number of really big movements up and down over the years and is down 20% so far this year and off 48% from its June 2015 zenith of 5,166.

Unlike more open and transparent markets in the U.S. and other developed countries, the Chinese government can get involved in China’s market with sweeping overnight rule changes and efforts to support the market. Keeping that in mind, the Shanghai Composite Index could decline further to the 2,400 to 2,000 area. A break of 2,000 would open the way to a bigger decline to around 1,500.

Overall, the bias in prices is: Downwards.

The projected upper bound is: 2,793.17.

The projected lower bound is: 2,601.63.

The projected closing price is: 2,697.40.

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 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 21 white candles and 29 black candles for a net of 8 black candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend (which appears to be the case with SSE COMPOSITE). It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend, it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 59.2508. This is not an overbought or oversold reading. The last signal was a buy 3 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 46.87. 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 51 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 -41. 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 buy 0 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 48.162 at 2,699.950. Volume was 9% below average (neutral) and Bollinger Bands were 33% narrower than normal.

Open High Low Close Volume___
2,644.2962,700.1932,644.2962,699.95011,576,799,232

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

Moving Averages: 10-period 50-period 200-period
Close: 2,680.86 2,762.11 3,093.46
Volatility: 19 22 21
Volume: 10,163,422,208 12,382,242,816 15,105,497,088

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 12.7% 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 23 periods.

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