Shanghai: SSE Composite Index (.SSEC) snaps two-day losing streak
There is a paradox in China’s world-beating stock rally this year: defensive plays are turning out to be the best performers.
While Chinese stocks have technically been in bull market territory this year following a 20 per cent gain in the Shanghai Composite Index, safe bets have been leading the charge so far. A gauge of consumer staples companies, from liquor distillers to dairy and food seasoning makers, has climbed 60 per cent, outperforming all other sectors.
The resilience of consumer stocks has baffled investors. Some say the scenario adds to evidence that there has never been a bull market, while others argue the quick gain in stock prices and ballooning turnovers are convincing signs of a raging bull.
The stock market sentiment has looked shaky recently, with the Shanghai Composite down almost 10 per cent from an April high. Overall corporate earnings have failed to catch up with share-price gains; economic growth is showing signs of decelerating again and a trade war against the US has flared up once again.
Overall, the bias in prices is: Sideways.
Note: this chart shows extraordinary price action to the downside.
The projected upper bound is: 3,106.81.
The projected lower bound is: 2,803.08.
The projected closing price is: 2,954.95.
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 28 white candles and 22 black candles for a net of 6 white candles.
Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.
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 80.1687. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 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 42.95. 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 4 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 -25. This is not a topping or bottoming area. The last signal was a buy 4 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 21 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed up 17.033 at 2,955.711. Volume was 15% below average (neutral) and Bollinger Bands were 89% 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: 2,927.68 3,086.29 2,774.91
Volatility: 43 32 28
Volume: 24,157,157,376 36,053,372,928 21,027,770,368
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 6.5% above 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 12 periods.
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