Shanghai: SSE Composite Index (.SSEC) Supported by ‘Soft’ Risk On Theme

Shanghai: SSE Composite Index (.SSEC) Supported by ‘Soft’ Risk On Theme

Shanghai: SSE Composite Index (.SSEC) Supported by ‘Soft’ Risk On Theme

The major Asia Pacific stock indexes finished mostly higher on Monday as the “risk on” theme continued following last week’s announcement that the United States and China were set to resume trade talks in early October. There was also a limited response to Friday’s mixed U.S. Non-Farm Payrolls report and the news that China’s exports unexpectedly fell in August. Perhaps underpinning the markets was the news that China’s central bank announced new stimulus measures.

On Monday, Japan’s Nikkei 225 Index settled at 21318.42, up 118.85 or +0.56%. Hong Kong’s Hang Seng Index finished at 26681.40, down 9.36 or -0.04% and South Korea’s KOSPI Index closed at 2019.55, up 10.42 or +0.52%.

China’s Shanghai Index settled at 3024.74, up 25.14 or +0.84% and Australia’s S&P/ASX 200 finished at 6648.00, up 0.70 or +0.01%.

Technical Indicators

Overall, the bias in prices is: Upwards.

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

The projected upper bound is: 3,100.03.

The projected lower bound is: 2,948.64.

The projected closing price is: 3,024.34.

Candlesticks

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.

A hammer occurred (a hammer has a long lower shadow and closes near the high). Hammers must appear after a significant decline or when prices are oversold to be valid. When this occurs, it usually indicates the formation of a support level and is thus considered a bullish pattern.

A hanging man occurred (a hanging man has a very long lower shadow and a small real body). This pattern can be bullish or bearish, depending on the trend. If it occurs during an uptrend (which appears to be the case with SSE COMPOSITE) it is called a hanging man line and signifies a reversal top. If it occurs during a downtrend it is called a bullish hammer.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

A rising window occurred (where the top of the previous shadow is below the bottom of the current shadow). This usually implies a continuation of a bullish trend. There have been 5 rising windows in the last 50 candles–this makes the current rising window even more bullish.

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 87.6026. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 10 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 72.16. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 22 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 167.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 16 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 25.137 at 3,024.739. Volume was 27% above average (neutral) and Bollinger Bands were 1% narrower than normal.

Open     High      Low     Close     Volume___
3,023.7783,026.2403,005.6953,024.73924,337,774,592
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 2,939.50 2,904.26 2,855.78
Volatility: 11 17 24
Volume: 21,467,392,000 17,090,166,784 22,855,460,864

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 gapped up today (bullish) on normal volume. Possibility of a Runaway Gap which usually signifies a continuation of the trend. Four types of price gaps exist – Common, Breakaway, Runaway, and Exhaustion. Gaps acts as support/resistance.
SSE COMPOSITE is currently 5.9% above its 200-period moving average and is in an upward 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 moderate flows of volume into .SSEC (mildly bullish). Our trend forecasting oscillators are currently bullish on .SSEC and have had this outlook for the last 11 periods. Our momentum oscillator is currently indicating that .SSEC is currently in an overbought condition.

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