Stock Index Chart Patterns - Shanghai Composite, Hang Seng, Singapore Straits Times - Dec 11, '09

Shanghai Composite index chart

The recovery from the Dubai-induced bearishness by the Shanghai Composite index chart pattern has been less than robust. The index did spring upwards from support at the 50 day EMA, but failed to regain the recent Nov 24 '09 high of 3361.

The 20 day EMA provided good support this week. All three EMAs are moving up and the index remains above them. So the bull market continues. But the momentum won't be regained till the high of 3478 made on Aug 4 '09 is convincingly crossed.

The technical indicators are looking weak. The slow stochastic is about to show a bearish cross, with the %K touching the %D line. The MACD is positive but below the signal line. The ROC has dipped below the '0' line. The RSI is about to move below the 50% level.

Hang Seng index chart

The Hang Seng index chart pattern is looking a lot weaker than the Shanghai Composite. The gap-down day below the 50 day EMA on Nov 27 '09 - on huge volumes - was the first time that the index closed below its medium-term average since July '09.

The upward recovery from an 'island reversal' pattern wasn't convincing at all. Volumes dropped as the index tried to rise. Five straight down days took the Hang Seng below the 50 day EMA once again. Today's 200 point gain could not prevent a 2.5% lower close for the week.

The technical indicators are looking quite bearish. The slow stochastic had a bearish cross and dropped below the 50% level. The MACD is in the negative zone and below its signal line. The ROC has been in the negative zone since the Dubai-induced sell-off. The RSI is below the 50% level and moving down.

Straits Times (Singapore) index

The bullishness in the Straits Times index chart pattern is quite a contrast to the Chinese indices. The index is forming an ascending-triangle pattern from which an upward breakout above the 2800 level is a possibility.

All three EMAs are moving up and the sequence of higher tops and bottoms continues. The bull market is apparently under no threat. But the technical indicators show some concerns.

The slow stochastic is in the overbought zone, but showing signs of falling. The MACD is in the positive zone, but has stopped rising and is below the signal line. The negative divergence is quite apparent as the MACD has failed to make a new high.

The ROC is at the '0' line, and also showing negative divergence. The RSI is above the 50% level but moving down, and also showing negative divergence.

Bottomline? The Asian indices are showing signs of fatigue after a prolonged bull run. Year-end profit booking considerations of FIIs are probably affecting the bull fervour. Some profit booking may not be a bad idea. But don't short these markets.