Shanghai: SSE Composite Index (.SSEC) more than 3,000 listed companies have started reporting results for the first half of the year

Shanghai: SSE Composite Index (.SSEC) more than 3,000 listed companies have started reporting results for the first half of the year

Shanghai: SSE Composite Index (.SSEC) more than 3,000 listed companies have started reporting results for the first half of the year

It may be a very bumpy earnings season in China.

The first of China’s more than 3,000 listed companies have started reporting results for the first half of the year. With the weakest economic growth on record reported this week in China, some blue chips have issued warnings of big drops in profits.

One of the most popular stocks with foreign traders – fabled Kweichow Moutai – tumbled 3.1 per cent this week after it posted its slowest quarterly sales growth in three quarters.

The fiery liquor maker isn’t likely to be crying into its baijiu alone.

The companies trading on the benchmark Shanghai Composite probably will announce a decline in earnings growth for the three-month period ended in June, according to Bloomberg data.

The consensus forecast is pretty positive: corporate earnings growth will probably accelerate to 32 per cent in the third quarter, according to Bloomberg data.

Chinese companies’ profit growth is likely to bottom out in the second half of the year, coinciding with an end to the downside on inventories and the return-on-equity ratio for listed companies, according to Shayne Heffernan, CEO and Founder of Heffx. His prediction was based on the calculation of the average duration of each historical economic cycle in China.

“All the trade issues have made people more conservative on their earnings forecasts,” said Shayne Heffernan. “The third quarter is looking better, clearly with the caveat of no major new disruptions from the trade front. If there is no further deterioration on the trade front, there should be an improvement in earnings.”

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 2,953.91.

The projected upper bound is: 3,023.31.

The projected lower bound is: 2,828.02.

The projected closing price is: 2,925.67.

Candlesticks

A white body occurred (because prices closed higher than they opened).
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 25 white candles and 25 black candles.

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 47.3259. This is not an overbought or oversold reading. The last signal was a buy 4 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 45.72. 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 49 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 -52. This is not a topping or bottoming area. The last signal was a buy 5 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 sell 9 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 23.024 at 2,924.201. Volume was 44% below average (neutral) and Bollinger Bands were 40% narrower than normal.

Open High Low Close Volume___
2,909.6792,939.5972,909.6792,924.20114,946,955,264

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

Moving Averages: 10-period     50-period     200-period
Close: 2,926.21 2,926.59 2,813.22
Volatility: 17 21 27
Volume: 15,220,678,656 19,957,747,712 22,633,185,280

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 3.9% 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 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 3 periods.

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