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Friday, August 28, 2009

Stock Index Chart Patterns - Shanghai Composite, Hang Seng, Singapore Straits Times - Aug 28, '09

Shanghai Composite index chart

In last week's analysis of the Shanghai Composite index chart pattern, it was noted that there was weakness in the short and medium term. The view was supported by the weakening technical indicators.

Despite a bounce up from the 200 day EMA, the 6 months closing chart pattern of the Shanghai Composite index failed to make much upward progress:-

ShanghaiComp_Aug2809

The index faced resistance at the 3000 level, a little below the 50 day EMA. Its efforts to breach the level during the week proved futile. The 20 day EMA is resting on the 50 day EMA, and both averages are moving down. The 200 day EMA has flattened. The bull rally has halted for the time being.

The RSI managed to stay just above the oversold zone. The slow stochastic is trying to emerge out of the oversold zone. The ROC is in negative territory, but moved up a bit during the week. The MACD and its signal line are in the negative zone, but the MACD has stopped falling.

The technical indicators have improved marginally over last week, but are still showing weakness - hinting at some more consolidation.

Hang Seng index chart

Not much change from last week's chart pattern of the Hang Seng index, which continued to remain entangled around its 20 day EMA, and looks stronger than the Shanghai Composite.

Hang Seng_Aug2809

The 20 day EMA remains above the 50 day and 200 day EMAs - both of which are rising. The bull rally remains on course, albeit with slowing momentum.

Both the RSI and slow stochastic are below their 50% levels. The ROC is in negative territory. The MACD is positive, but has fallen a little from last week, and has stayed below the signal line. The technical indicators look a little weaker than last week, which may lead to further correction.

Straits Times (Singapore) index

The Singapore Straits Times index chart pattern is looking in much better shape than the two indices of its much bigger Asian neighbour. While all the attention of the world media was hogged by the Shanghai Composite and Hang Seng indices, the Straits Times index has quietly retraced 50.8% (close enough to the 50% Fibonacci retracement level) of the entire bear market fall when it touched a high of 2701 on Aug 4, '09.

Straits Times_Aug2809

The index corrected from its recent high, but received support from its 20 day EMA - much like the Hang Seng index - but managed to close above the short term average on all 5 trading days of the week. (The Hang Seng ended the week below its 20 day EMA; the Shanghai Composite closed below its 20 day and 50 day EMAs.)

The RSI is at the 50% level. The ROC is in positive territory, but looking down at the '0' level. The MACD has moved up a bit and is touching its signal line. The slow stochastic has moved up sharply above the 50% level, and looking bullish.

Bottomline? The stock index chart pattern of the Shanghai Composite continues to show weakness. The Hang Seng chart is also wanting to correct a bit more. Only the Singapore Straits Times chart seems ready to challenge the 50% Fibonacci resistance level (which neither the Shanghai Composite, nor the Hang Seng has been able to reach).

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