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Friday, November 6, 2009

Stock Index Chart Patterns - Shanghai Composite, Hang Seng, Singapore Straits Times - Nov 6, '09

Shanghai Composite index chart

ShanghaiComp_Nov0609

The index chart pattern of the Shanghai Composite bounced up smartly from the support provided by the 50 day EMA and comfortably moved above the 3000 level, as the bulls regrouped to overwhelm the bears. The index made higher highs and higher closes each day, closing 5.6% (168 points) higher for the week.

The 20 day EMA has moved above the 50 day EMA, and all three moving averages have started moving up - supporting the bullishness. The previous high of 3478 made on Aug 4 '09 needs to be challenged and conquered for the bull rally to regain its strength.

The slow stochastic has turned around sharply and re-entered the overbought zone. The MACD is in the positive territory and above its signal line. The ROC bounced off the '0' level and is in the positive zone. The RSI remains above the 50% level. The correction, followed by the sideways consolidation seems to be over.

Hang Seng index chart

HangSeng_Nov0609

Some more sideways consolidation for the Hang Seng index, as it bounced around between the support from the 50 day EMA and resistance from the 20 day EMA before closing 77 points (< 1%) higher for the week.

The volumes have eased off and the technical indicators have weakened further. The slow stochastic and RSI are both below their 50% levels. The MACD has moved down some more and is below the signal line. The ROC has dropped further down into negative territory. The sideways consolidation doesn't seem to be over yet.

Straits Times (Singapore) index

Straits Times_Nov0609

The chart pattern of the Singapore Straits Times index shows continued sideways consolidation, wrapping around the 50 day EMA, with a marginal 7 points higher close for the week. The index failed to close above the 20 day EMA.

The technical indicators look weaker than those of the Hang Seng index. The slow stochastic and the RSI are both below their 50% levels. The MACD has entered the negative zone for the first time since Mar '09, and remains below the signal line. The ROC is in negative territory. The index is having trouble crossing the 2700 level.

Bottomline? The Shanghai Composite chart pattern shows that the bulls have managed to thwart the bear attack. Not so for the Hang Seng and Straits Times indices, which are still in consolidation mode. Investors should wait and watch. This is not the opportune time to jump in.

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