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Friday, February 19, 2010

Stock Index Chart Patterns - Hang Seng, Jakarta Composite - Feb 19, '10

Hang Seng index chart


Last week's analysis was concluded with the following remarks:

'Any signs of a pull back can be selling opportunities. Wait for lower levels to enter.'

A holiday shortened week saw a great effort by the bulls to pull back the Hang Seng index chart above the 20000 mark, giving good opportunity to sell. Once again, the 20 day EMA proved to be a tough resistance to overcome and today's 500 point drop pushed the index down below the 200 day EMA and the 20000 mark.

The attempted recovery on falling volumes could not be sustained. The technical indicators improved somewhat. The slow stochastic and the RSI both managed to move above the 50% level. The MACD is still negative but above the signal line. The MFI moved up towards the 50% level.

Today's big drop seems to have negated the fledgling recovery and the bears have wrested control once again - at least in the near term.

Jakarta Composite index chart


With the Shanghai Composite and Taiwan TSEC indices enjoying a new year holiday, let us have a look at the Jakarta Composite index chart pattern - which is looking a bit stronger than the Hang Seng index chart.

The index is resting on the 20 day EMA, which is just above the 50 day EMA. The 200 day EMA is still rising, but the low volumes are a concern.

The slow stochastic is above the 50% level, but the RSI and MFI have both moved down after touching their 50% levels. The MACD is negative and touching the signal line.

The index made a lower top before moving down, indicating that the correction may resume next week.

Bottomline? The brief recovery in the Asian indices seem to be over as the bears have regained control. A deeper correction is likely. Stay on the sidelines till a clearer trend emerges.

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