Shanghai: SSE Composite Index (.SSEC) lower as fewer new coronavirus cases offset negative cues stemming from Wall Street’s sharp drop
China and Hong Kong stocks were flat on Wednesday as fewer new coronavirus cases offset negative cues stemming from Wall Street’s sharp drop following the U.S. Fed’s surprise rate cut.
The CSI300 index was unchanged at 4,092.60 points at the end of the morning session, while the Shanghai Composite Index gained 0.1% to 2,994.80 points.
The markets were calm despite sharp losses overnight on Wall Street after the U.S. Federal Reserve surprised investors with a half percentage-point cut in interest rates, amplifying fears about the magnitude of the coronavirus’ impact on the economy.
The rate reduction underscored the U.S. central bank’s concern about the new coronavirus, which has spread around the world after emerging late last year in China. It came two weeks ahead of a scheduled policy meeting, where traders had fully priced in a 50-basis-point cut.
China’s central bank kept short-term borrowing costs steady on Wednesday, shrugging off the U.S. Federal Reserve’s emergency policy rate cut.
But markets widely believe Chinese authorities will continue to move to lower financing costs for business and roll out powerful measures prop up the economy, which has been hit by a coronavirus outbreak.
The coronavirus epidemic dealt a severe blow to businesses in Hong Kong in February, with activity plummeting to the lowest on record, a private survey showed on Wednesday, in a sign of a sharp economic downturn in the first quarter.
China’s CSI300 financial sector sub-index was higher by 0.74%, the consumer staples sector up 1.43%, the real estate index up 3.56% and the healthcare sub-index down 0.19%.
Chinese H-shares listed in Hong Kong rose 0.61% to 10,549.29, while the Hang Seng Index was up 0.12% at 26,317.56.
The smaller Shenzhen index was down 0.19% and the start-up board ChiNext Composite index was weaker by 0.66%.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 3,152.76.
The projected lower bound is: 2,871.66.
The projected closing price is: 3,012.21.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white 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 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. It then signifies that the momentum may be shifting from the bears to the bulls.
If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with SSE COMPOSITE), 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 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 75.7322. This is not an overbought or oversold reading. 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 54.13. 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 20 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 40. This is not a topping or bottoming area. The last signal was a buy 2 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 0 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed up 18.769 at 3,011.666. Volume was 60% above average (neutral) and Bollinger Bands were 10% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 2,994.92 2,997.51 2,942.43
Volatility: 33 31 21
Volume: 38,739,128,320 27,882,926,080 20,068,464,640
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 2.4% above its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume into .SSEC (mildly bullish). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 3 periods.