Shanghai: SSE Composite Index (.SSEC) renewed optimism in China’s economy takes hold as US trade deal looks all but certain

Shanghai: SSE Composite Index (.SSEC) renewed optimism in China’s economy takes hold as US trade deal looks all but certain

Shanghai: SSE Composite Index (.SSEC) renewed optimism in China’s economy takes hold as US trade deal looks all but certain

More signs of improved business sentiment in China helped push the country’s main stock benchmark past its highest level since March of last year on Wednesday, as investors continue to warm to an optimistic view of the engine of global growth.

The Caixin’s China General Services Business Activity Index rose to 54.4 in March, from just over 51 in February, following an unexpectedly strong result in the same research group’s manufacturing sector index. A reading above 50 on the survey reflects expectations of business expansion among respondents.

The Shanghai Composite Index led gains in major Asian benchmarks, up 1.24%.

Adding fuel to the rally in Shanghai were comments from Trump administration economic advisor Larry Kudlow on Tuesday that there was a “certain amount of optimism” surrounding trade talks with China.

Analysts note that the survey results, which represent sentiment and not hard economic data, might be colored by headlines coming out of the trade talks.

“We expect to make more headway. I can’t report any of the details, but it’s a larger, grander discussion than anything we’ve had before in U.S.-China trade relations, and there’s a certain amount of optimism,” Kudlow said, speaking at the US Chamber of Commerce.

US President Donald Trump recently commented to reporters that the existing tariffs will not be lifted initially as part of a deal.

Overall, the bias in prices is: Upwards.

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

The projected upper bound is: 3,362.29.

The projected lower bound is: 3,096.13.

The projected closing price is: 3,229.21.

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 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 33 white candles and 17 black candles for a net of 16 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 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 95.8717. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 69.36. 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 sell 18 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 162.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 8 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 39.472 at 3,216.295. Volume was 77% above average (neutral) and Bollinger Bands were 7% wider than normal.

Open High Low Close Volume___
3,159.1473,219.2563,152.3323,216.29543,054,862,336

Technical Outlook
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 3,091.76 2,874.80 2,744.05
Volatility: 30 29 27
Volume: 38,111,985,664 32,297,814,016 18,621,564,928

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 17.2% above its 200-period moving average and is in an upward trend. Volatility is high 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 bullish on .SSEC and have had this outlook for the last 51 periods.

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