Shanghai: SSE Composite Index (.SSEC) What could go wrong?

Shanghai: SSE Composite Index (.SSEC) What could go wrong?

Shanghai: SSE Composite Index (.SSEC) What could go wrong?

Prepare for a repeat of China’s 2015 boom, bust and whimper?

Days after replacing an overly cautious securities regulator, Beijing has mounted a multi-pronged effort to revive the market’s buzz: It set out the framework for a new tech-stocks exchange, cleared the way for more margin loans, made it easier for securities firms to buy stocks, and opened the futures and options markets to foreign investors.

The changes amount to a blunt official inducement to jump back into a market where shares have been struggling, trading volumes are anemic, and profit warnings are piling up. Yi Huimian’s appointment as chairman of the China Securities Regulatory Commission signaled a return to risk, as we wrote Monday. The new regime clearly isn’t wasting any time.

Hong Kong should be worried. Draft regulations for Shanghai’s technology innovation board, an initiative announced by President Xi Jinping in November, look to be a lot more relaxed than those of its southern competitor. Hong Kong was the world’s top IPO market last year after easing its rules to attract Chinese new economy listings such as Xiaomi Corp. and Meituan Dianping. Both are now trading under water.

In many ways, companies will find going public easier in Shanghai. The new board will adopt a registration model, akin to the U.S. That means there will be no regulator to vet entries, as in Hong Kong. There won’t be any profit requirement. Stocks also will be free of the 10 percent daily trading limit that applies on the main Shanghai and Shenzhen exchanges. The first five trading days won’t have any cap or floor, and after that there will be a limit of 20 percent.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 2,691.05.

The projected lower bound is: 2,544.09.

The projected closing price is: 2,617.57.

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 26 white candles and 24 black candles for a net of 2 white 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 46.6495. This is not an overbought or oversold reading. The last signal was a sell 8 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 60.07. 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 73 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 126.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 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 19 period(s) ago.

Rex Takasugi – TD Profile

SSE COMPOSITE closed up 33.660 at 2,618.232. Volume was 14% below average (neutral) and Bollinger Bands were 46% narrower than normal.

Open High Low Close Volume___
2,597.7782,618.4772,590.5542,618.23213,198,685,184

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

Moving Averages: 10-period 50-period 200-period
Close: 2,593.42 2,570.21 2,774.96
Volatility: 13 18 24
Volume: 14,701,819,904 14,267,929,600 14,049,133,568

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 5.6% below 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 volume flowing into and out of .SSEC at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .SSEC and have had this outlook for the last 13 periods. The security price has set a new 14-period high while our momentum oscillator has not. This is a bearish divergence.

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