Shanghai: SSE Composite Index (.SSEC) Hugely important decisions will be made that could impact China stocks
China’s economic and political power players will flood into Beijing this week to determine the country’s future agenda. Markets can be expected to react.
The Two Sessions, or Lianghui, are the annual parliamentary meetings of China’s main legislative and political bodies: the National People’s Congress and the National Committee of the Chinese People’s Political Consultative Conference. Decisions here filter through the nation and have implications worldwide.
This year’s gathering, beginning Tuesday and going on for about two weeks, comes in the middle of a trade war with the US, amid the roll-out of plans for 11 integrated cities to form an innovation and financial hub called the Greater Bay Area, and as the Shanghai Composite Index swung from a bear to bull market in 32 trading days, adding US$1 trillion to the market.
Meanwhile, newly appointed top securities regulator Yi Huiman sounded a warning to investors about risks to China’s capital markets. Yi said he wants to create a “standardised, transparent and open market,” vowing to dissolve dangers in areas like stock pledges, bond defaults and private equity funds.
“There is a myth in China that whenever big meetings happen, the market plunges,” said Lu Shunxi, a Shanghai-based trader and investment director.
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 2,727.47.
The projected upper bound is: 3,100.83.
The projected lower bound is: 2,902.86.
The projected closing price is: 3,001.84.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 30 white candles and 20 black candles for a net of 10 white candles.
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 84.7842. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 6 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 80.57. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 6 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 overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 18 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 buy 34 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed up 53.051 at 2,994.005. Volume was 90% above average (neutral) and Bollinger Bands were 153% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 2,861.88 2,629.66 2,752.80
Volatility: 34 23 25
Volume: 36,597,719,040 19,259,348,992 15,305,944,064
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 8.8% above its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect very strong flows of volume into .SSEC (bullish). Our trend forecasting oscillators are currently bullish on .SSEC and have had this outlook for the last 28 periods. Our momentum oscillator is currently indicating that .SSEC is currently in an overbought condition. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.
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