Shanghai: SSE Composite Index (.SSEC) systemic reform is imperative

Shanghai: SSE Composite Index (.SSEC) systemic reform is imperative

Shanghai: SSE Composite Index (.SSEC) systemic reform is imperative

There have been calls from high-level government officials to boost the stock market in recent days and various measures have been taken, but the core issue is not to return to the kind of bull market that was seen in 2014 and early 2015.

Instead the key factor is finding out how to stabilize the market so that confidence in it can be rebuilt. Based on past experience, government polices to boost the market only have short-term effects. To ensure long-term stable growth in the Chinese stock market, systemic reform is imperative.

During the market crisis in 2015, after the Shanghai Composite Index dropped by 6.5 percent on May 28, the Xinhua News Agency called for stabilizing measures. But within one month, the index fell more than 9 percent.

In 2016, when the Shanghai Composite Index declined by 6.9 percent on January 4, the China Securities Regulatory Commission moved to support the market the very next day and this lifted the index. But a month later, the index was still 17 percent lower than the level on January 4.

Share pledge financing also involves many institutions and many areas. The unknown risks make it more likely that investors will panic. This is the key reason for this year’s repeated market declines.

If regulators do not step in, there will be a bigger problem because the panic will trigger a new round of declines and cause greater trouble.

If the authorities do not institute systemic reforms in the Chinese stock market, it will not be easy to ensure long-term stable development.

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 2,735.34.

The projected upper bound is: 2,804.99.

The projected lower bound is: 2,546.81.

The projected closing price is: 2,675.90.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 25 white candles and 25 black candles.

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 85.5912. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 54.44. 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 10 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 148.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 10 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 6 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 70.239 at 2,676.476. Volume was 70% above average (neutral) and Bollinger Bands were 2% narrower than normal.

Open High Low Close Volume___
2,649.2512,676.4762,628.8702,676.47622,502,692,864

Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 2,605.13 2,678.35 3,005.05
Volatility: 35 31 25
Volume: 17,786,669,056 13,023,301,632 15,127,601,152

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 10.9% below its 200-period moving average and is in an downward trend. Volatility is high 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 bearish on .SSEC and have had this outlook for the last 15 periods.

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