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Friday, January 29, 2010

Stock Index Chart Patterns - Shanghai Composite, Hang Seng, Taiwan TSEC - Jan 29, '10

Shanghai Composite index chart

ShanghaiComp_Jan2810

During my last look at the Shanghai Composite chart pattern 3 weeks back, the bulls were struggling to extricate themselves from the bear's clutches. Things have gone from bad to worse since then - perhaps due to the talk of credit tightening.

The index has once again dropped down to the 200 day EMA where it is hanging on for dear life. The 20 day EMA has given a bearish cross below the falling 50 day EMA.

The slow stochastic has entered the oversold zone. The MACD is negative and below the signal line. The ROC is in negative territory and sliding further. The RSI is trying to keep its head above the oversold zone.

The lower tops and bottoms on the chart pattern show that the bears have a firm grip on the situation.

Hang Seng index chart

HangSeng_Jan2810

In the previous week, the Hang Seng chart was under a severe bear attack. The bears have further consolidated their position. The index has fallen below the crucial support of the 200 day EMA and went below the 20000 level during the last day of the month.

The slow stochastic is well inside the oversold zone. The MACD is negative and below the signal line. The ROC is deep in the negative zone. The RSI has also entered the oversold zone.

Looks like the bull rally has ended for now.

Taiwan (TSEC) index chart

TSEC_Jan 2810

The last look at the Taiwan (TSEC) chart pattern 5 weeks back showed the bulls in irrepressible form, but there were some concerns of the index being overbought. The concerns were not misplaced.

The index continued to make newer and higher highs right through the middle of Jan '10 before the global selling onslaught brought the index crashing down.

The TSEC has fallen through the supports of both the 20 day and 50 day EMAs and fell below the 7500 level on an intra-day basis on the last day of the month.

The slow stochastic has entered the oversold zone. The RSI is about to do the same. The ROC is in negative territory. The MACD has also entered the negative zone and is below the falling signal line.

Bottomline? The Asian indices have succumbed to a strong bear onslaught. Stay on the sidelines for the correction to play out. Better and cheaper entry points should be available in the near future.

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