Shanghai: SSE Composite Index (.SSEC) sank as investors’ favourite bets fizzled out
China’s stocks dropped to a three-week low, as traders reduced bets on stocks with outsize gains before a weeklong holiday to mark the 70th anniversary of the founding of the Communist nation.
The Shanghai Composite Index fell 0.9 per cent to 2,929.09 on Thursday, the lowest level since September 2. A gauge of smaller companies trading on Shenzhen’s ChiNext board tumbled 2.9 per cent, the biggest loss in four months. Hong Kong’s Hang Seng Index added 0.4 per cent to 26,041.93.
Sell-offs gained strength among traders who opted to exit the market ahead of the weeklong National Day holiday starting on October 1.
The hangover of the US-China trade war and the political unrest in Hong Kong are among the key market-moving factors that investors still need to keep a close watch when China’s markets are closed for holiday from October 1 to 7.
“Investors are selling to steer clear of uncertainty that may pop up in the coming days,” said Wu Kan, an investment manager at Soochow Securities in Shanghai. “They are pocketing gains for safety sake.”
Stocks that had been riding the hottest investment themes this year bore the brunt of the selling. Jiangxi Zhengbang Technology and other pork producers slumped on fears their share price gains were excessive and there would be more insider selling.
Jiangxi Zhengbang slumped by the 10 per cent daily limit to 14.56 yuan in Shenzhen, paring its advance to 174 per cent this year, while Muyuan Foodstuff also sank by that much to 62.64 yuan, trimming its annual gain to 118 per cent. New Hope Liuhe, controlled by billionaire Liu Yonghao, tumbled 10 per cent to 16.04 yuan after the stock had surged 145 per cent year to date.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 2,942.77.
The projected upper bound is: 3,003.19.
The projected lower bound is: 2,854.88.
The projected closing price is: 2,929.04.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 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 13.3731. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 8 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 44.71. 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 7 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 -187.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 9 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 sell 5 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed down -26.345 at 2,929.087. Volume was 2% above average (neutral) and Bollinger Bands were 15% narrower than normal.
Open High Low Close Volume___
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 2,987.84 2,912.18 2,877.99
Volatility: 15 16 23
Volume: 18,445,862,912 17,717,645,312 22,952,155,136
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 1.8% above its 200-period moving average and is in an upward trend. Volatility is relatively normal 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 23 periods.