Shanghai: SSE Composite Index (.SSEC) trading higher due to increased factory activity and expectations of a long-term trade deal between the United States and China

Shanghai: SSE Composite Index (.SSEC) trading higher due to increased factory activity and expectations of a long-term trade deal between the United States and China

Shanghai: SSE Composite Index (.SSEC) trading higher due to increased factory activity and expectations of a long-term trade deal between the United States and China

Chinese shares jumped on Friday thanks to signs of increased factory activity and expectations of a long-term trade deal between the United States and China.

Home appliance, rare earth and 5G shares led the surge on Friday.

The Shanghai Composite Index closed higher by 0.99 percent to 2,958.20 points. The Shenzhen Component Index closed 1.73 percent higher at 9,802.33 points, while the ChiNext gained 0.94 percent.

Combined trading volume on the two bourses was 434.93 billion yuan (US$62.1 billion), compared with 451.3 billion yuan the previous trading day.

On Friday, the Caixin/Markit Manufacturing Purchasing Managers’ Index (PMI) came in at 51.7 for the month of October, as production and new orders both expanded at a faster pace. PMI readings above 50 indicate expansion, while those below that level signal contraction.

Home appliance and 5G shares led the day’s gains, as the upcoming November 11 online shopping festival is expected to give them a boost.

Gree Electric Appliances jumped 8.65 percent to 63.78 yuan while Midea Group surged 6.11 percent to close at 58.89 yuan.

Meanwhile, amidst a slowdown in corporate profit growth and monetary easing, UBS holds a “neutral” rating on Chinese shares for the future, the investment banker said in a report on Friday.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 2,943.57.

The projected upper bound is: 3,027.53.

The projected lower bound is: 2,894.57.

The projected closing price is: 2,961.05.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with SSE COMPOSITE), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

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 37.5367. 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 51.16. 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 sell 28 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 -42. This is not a topping or bottoming area. The last signal was a sell 13 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 sell 9 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 29.143 at 2,958.199. Volume was 7% below average (neutral) and Bollinger Bands were 46% narrower than normal.

Open     High      Low     Close     Volume___
2,924.3402,959.8332,917.1462,958.19915,990,736,896
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 2,949.23 2,947.95 2,919.15
Volatility: 11 14 23
Volume: 14,572,895,232 17,391,802,368 23,173,490,688

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% above its 200-period moving average and is in an downward trend. Volatility is relatively normal 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 17 periods.

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