Shanghai: SSE Composite Index (.SSEC) stocks fall as U.S. rate cut expectations ease
Chinese stocks fell on Monday, with the benchmark Shanghai Composite index posting its biggest daily loss in more than two months, as investors scaled back expectations for sharp U.S. rate cuts and a slew of new listings this week weighed on tech shares.
At the close, the Shanghai Composite index was down 2.58% at 2,933.36, in its biggest daily loss since May 6.
“With the Sino-U.S. relaxation and the opening of the gates to the STAR Market, investors should watch tech shares in the interim. But with the concentration of new listings this week, investors should be on guard against the impact on market liquidity,” the analysts said.
Twenty-two companies are set to conduct initial public offerings this week, of which 21 are on China’s new high-tech STAR Market. The Shanghai Stock Exchange said on Friday that the trading in shares of the first batch of companies on the STAR Market would begin on July 22.
Computer firms slumped 3.96% and IT firms dropped 3.72%.
Weakness on Monday was also related to new U.S. nonfarm payroll data, said Cao Xuefeng, head of research at Huaxi Securities in Chengdu. “U.S. nonfarm data wasn’t bad, and it has lowered the likelihood that the Fed cuts rates in July,” he said. Some analysts believe China could follow the Fed by cutting rates in July.
Overall, the bias in prices is: Downwards.
The projected upper bound is: 3,055.88.
The projected lower bound is: 2,800.24.
The projected closing price is: 2,928.06.
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 25 white candles and 25 black 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 28.7003. This is not an overbought or oversold reading. The last signal was a sell 2 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 45.16. 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 40 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 -111.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 3 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 0 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed down -77.696 at 2,933.363. Volume was 30% below average (neutral) and Bollinger Bands were 37% narrower than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 2,998.78 2,942.62 2,802.10
Volatility: 22 27 27
Volume: 20,353,464,320 22,152,431,616 22,433,593,344
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 4.7% above its 200-period moving average and is in an upward 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 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 16 periods. our momentum oscillator has set a new 14-period low while the security price has not. This is a bearish divergence.