Shanghai: SSE Composite Index (.SSEC) weakening domestic demand
Supportive words from China’s securities regulator failed to slow the $3 trillion rout in the the nation’s stock market, as evidence of weakening domestic demand added to concern about the trade war with the U.S.
The Shanghai Composite Index fell 1.5 percent to its lowest close since November 2014. A gauge of consumer-related shares dropped the most after data showed purchases of passenger vehicles and online appliance sales slumped in September.
U.S. Treasury Secretary Steven Mnuchin expressed concerns over the yuan’s weakness and called for a currency clause that would prevent competitive devaluations to be included in any trade talks with Japan. Separately, China’s ambassador to the U.S. said Beijing has no choice but to respond to what he described as a trade war started by the U.S.
As the equity rout worsened, reports emerged of government support to aid investor confidence:
The government is encouraging insurers to invest in listed companies and help cut liquidity risks connected with the pledging of firms’ shares to secure loans, the China Securities Journal reported on Saturday, citing a senior official with the banking and insurance regulator.
The local government of Shenzhen has allocated tens of billions of yuan for efforts to reduce share-pledge risks and improve the liquidity of listed companies registered in the city, according to the Shanghai Securities News. More than 20 companies will be getting support in the first wave of measures, the report says
A subgauge of consumer discretionary stocks fell 2.1 percent, the most among the CSI 300 Index’s 10 industry groups. Great Wall Motor Co. slumped 9.4 percent to its lowest since 2012, while Qingdao Haier Co. tumbled 9.2 percent.
Overall, the bias in prices is: Downwards.
Note: this chart shows extraordinary price action to the downside.
By the way, prices are vulnerable to a correction towards 2,785.04.
The projected upper bound is: 2,708.80.
The projected lower bound is: 2,472.18.
The projected closing price is: 2,590.49.
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 26 white candles and 24 black candles for a net of 2 white 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 24.8013. This is not an overbought or oversold reading. The last signal was a buy 0 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 38.11. 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 65 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 -119.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 6 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 3 period(s) ago.
Rex Takasugi – TD Profile
SSE COMPOSITE closed up 27.857 at 2,595.955. Volume was 75% below average (consolidating) and Bollinger Bands were 28% wider than normal.
Open High Low Close Volume___
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 2,693.77 2,726.81 3,052.14
Volatility: 40 28 23
Volume: 12,956,358,656 11,972,918,272 15,009,207,296
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 14.9% below its 200-period moving average and is in an downward 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 bearish on .SSEC and have had this outlook for the last 2 periods.