Shanghai: SSE Composite Index (.SSEC) Rebound with Biggest Gains Since 2016

Shanghai: SSE Composite Index (.SSEC) Rebound with Biggest Gains Since 2016

Shanghai: SSE Composite Index (.SSEC) Rebound with Biggest Gains Since 2016

Chinese large cap stocks climbed the most in two years, bouncing back from a bruising run of losses in the lead up to the imposition of U.S. tariffs last Friday. The yuan also rose after retreating for four weeks straight.

Market sentiment improved on a temporary relief of concerns on the China-U.S. trade spat.

The trade war didn’t worsen over the weekend and investors are expecting a relatively quiet week ahead on the trade front as Trump will be tied up with his Europe visit.

China’s Finance Ministry on Friday responded to Washington’s imposition of tariffs, saying the U.S. had ignited the largest trade war in history and accusing the Trump administration of bullying. It also said China would continue to deepen reform, open up its markets and create a “favorable business environment for companies from all over the world operating in China.

Chinese stocks are still among the world’s worst performers this year. In addition to the trade war threat, investors have been troubled by a domestic deleveraging campaign weighing on liquidity, signs of an economic slowdown, and a weaker currency. The Shanghai index is in a bear market after dropping more than 20 percent from its January high.

Overall, the bias in prices is: Downwards.

Note: this chart shows extraordinary price action to the downside.

By the way, prices are vulnerable to a correction towards 2,996.33.

The projected upper bound is: 2,910.18.

The projected lower bound is: 2,707.92.

The projected closing price is: 2,809.05.

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 5 white candles and 5 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 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 47.2996. This is not an overbought or oversold reading. The last signal was a buy 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 39.05. This is not a topping or bottoming area. However, the RSI just crossed above 30 from a bottoming formation. This is a bullish sign. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 0 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 -33. 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 67.881 at 2,815.110. Volume was 17% below average (neutral) and Bollinger Bands were 76% wider than normal.

Open High Low Close Volume___
2,752.4472,815.7902,752.4472,815.11012,154,931,200

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

Moving Averages: 10-period 50-period 200-period
Close: 2,790.98 3,031.46 3,251.34
Volatility: 28 22 18
Volume: 12,892,344,320 13,316,665,344 16,465,409,024

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 13.4% below its 200-period moving average and is in an downward 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 moderate flows of volume out of .SSEC (mildly bearish). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 26 periods. Our momentum oscillator has set a new 14-period high while the security price has not. This is a bullish divergence.

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