Shanghai: SSE Composite Index (.SSEC) stocks get small gains amidst investors’ “observation mode”

Shanghai: SSE Composite Index (.SSEC) stocks get small gains amidst investors’ “observation mode”

Shanghai: SSE Composite Index (.SSEC) stocks get small gains amidst investors’ “observation mode”

The Hang Seng Index declined by 0.2 per cent to 26,436.62. However, markets in China reversed early losses, getting small gains by the close. The Shanghai Composite Index ended 0.1 per cent, or 2.84 points, higher at 2,917.32. The Shenzhen Component Index added 0.4 per cent, while the ChiNext Index rose 0.8 per cent.

“Pretty much everyone is in observation mode right now,” said Kevin Leung, executive director of investment strategy at Haitong International Securities. “If the US pulls back scheduled tariffs on Chinese imports on Sunday, the Hang Seng Index stands a chance of rising above the 27,000-point level by the end of this year,” he said.

“The market has priced in all the negatives, but at the same time I can’t see anything substantially positive that could support a rebound,” he added.

Li Ning, a major sports brand in Hong Kong, tumbled 6.3 per cent to HK$23.8, while Anta Sports dropped 4.3 per cent to HK$70.75, and Xtep International Holdings weakened by 2 per cent to HK$3.85.

The Hong Kong-listed shares of Alibaba Group Holding, which owns the South China Morning Post, recorded another loss, following their recent inclusion in the Hang Seng Composite Index. The stock fell 0.6 per cent to HK$195.4, after a previous decline of 0.5 per cent.

The Postal Savings Bank of China, China’s biggest initial public offering since 2010, closed with a slight gain of 2 per cent at 5.61 yuan. New stocks also soared on their first day of trading in China, amidst investors’ cautiousness of late.

Muyuan Foodstuff, one of the largest pork producers in China, fell by 5.3 per cent to 84 yuan, as investors took profits on a strong rally this year amid worries over its future output. An outbreak of African swine flu has swept across China and sent pork prices soaring. The company’s shares have gained 193 per cent so far this year.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 2,929.78.

The projected upper bound is: 2,979.07.

The projected lower bound is: 2,868.52.

The projected closing price is: 2,923.80.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

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 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 92.7874. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 17 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 53.67. 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 56 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 139.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 4 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 3 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 7.102 at 2,924.417. Volume was 2% above average (neutral) and Bollinger Bands were 59% narrower than normal.

Open     High      Low     Close     Volume___
2,922.6022,928.2562,915.0012,924.41716,554,108,928
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 2,896.80 2,931.18 2,962.73
Volatility: 7 12 22
Volume: 13,939,672,064 14,540,919,808 22,788,126,720

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 1.3% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect volume flowing into and out of .SSEC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .SSEC and have had this outlook for the last 45 periods.

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