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Friday, December 18, 2009

Stock Index Chart Patterns - Shanghai Composite, Hang Seng, Korea KOSPI - Dec 18, '09

Shanghai Composite index chart


The chart pattern of the Shanghai Composite index has become weaker than last week as the bears have once again made their presence felt. Today's close of 3114 has taken the index below the support of the 50 day EMA.

The saving grace for the bulls is that the Nov 27 '09 low of 3081 has not yet been broken, That would have started a bearish sequence of lower tops and bottoms. But the reprieve may be temporary. The technical indicators are not supporting a fight back by the bulls next week.

The slow stochastic has headed down to the 50% level with a bearish cross of the %K line below the %D. The MACD is barely positive and has gone below the signal line. The ROC is trying to cling to the '0' line. The RSI has moved below the 50% level.

Bulls should watch out for support at the 3000-3100 zone and below that, near the 200 day EMA.

Hang Seng index chart


The Hang Seng index chart is looking distinctly bearish, though it managed to stay above the Nov 27 '09 low of 21002. The index has dropped well below the 50 day EMA and has dragged down the 20 day EMA to the flattened medium-term moving average.

The technical indicators are all bearish. The slow stochastic has dropped below the 50% level and heading towards the oversold zone. The MACD is in negative territory and below the signal line. The ROC has dropped sharply into the negative zone. The RSI is moving sideways below the 50% level.

The only hope for the bulls is possible support from the 200 day EMA.

KOSPI (Korea) index chart


My last look at the KOSPI index chart was back in Oct 30 '09, when the bears were in full control. A revival effort by the bulls in Nov '09 was viciously beaten back as the bears took the index down close to the 200 day EMA by the end of the month.

The fight back by the bulls in Dec '09 has been quite spirited, but the index failed to cross the Oct 15 '09 high of 1672 - falling short by 2 points. The bears used that as an excuse to stall the rally.

But the technical indicators are hinting that the bulls may still have some fight left in them. The slow stochastic is in the overbought zone. The MACD is positive and above the signal line. The ROC is in positive zone but has turned down. The RSI is above the 50% level and rising.

Bottomline? Last week I had mentioned about the possibility of year-end profit booking by the FIIs. The bull rally in the Asian indices seem to be over for now. Continue to book profits.

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