Stock Index Chart Patterns - Shanghai Composite, Hang Seng, Singapore Straits Times - Feb 05, '10

Shanghai Composite index chart

Last week, the Shanghai Composite index chart was trying to hang on to the 200 day EMA for dear life, as the bears took charge of the situation. The index slipped below the long-term moving average on the first two days of the week before swinging back up on the next two days.

Just when bulls started hoping that they would be able to do a repeat performance of the end Aug '09 and end Sep '09 recoveries, a renewed bear attack dashed their hopes and caused the index to slip below the 200 day EMA once again.

The technical indicators are hinting at a further fall. The 20 day EMA is well below the 50 day EMA with both moving down. The 200 day EMA has stopped rising.

The slow stochastic is in oversold zone. The RSI made a feeble attempt to recover from the oversold zone. The ROC is in negative territory and moving down. The MACD is also negative and below the signal line.

Hang Seng index chart

The attempt at a recovery by the Hang Seng index chart was a little stronger than that of the Shanghai Composite chart. But the end result was no different.

The index managed to move above the 200 day EMA, only to face resistance from the falling 20 day EMA. Today's heavy selling pressure took the index below the psychological 20000 level where it closed at its lowest point in 5 months.

The slow stochastic is in oversold zone. The MACD is negative and below the signal line. The ROC is also negative. The RSI is trying to emerge from the oversold zone.

Straits Times (Singapore) index

Four weeks back, the Straits Times (Singapore) index was soaring up and making new highs. But I had warned about bearish possibilities:

'The bears need not lose heart. There are negative divergences in the technical indicators. A correction could be in the offing.'

A sharp 8% correction from 2947 to 2706 followed before the index started a sideways consolidation. The Singapore index remains well above the rising 200 day EMA, though it has fallen below the 20 day and 50 day EMAs.

The bulls are in slightly better shape than their Chinese counterparts, but the technical indicators are all looking weak.

Bottomline? A coordinated bear attack is decimating the Asian indices. Keep your 'buy list' ready and await the correction to play out.