Friday, March 5, 2010

Stock Index Chart Patterns - Shanghai Composite, Hang Seng, Singapore Straits Times - Mar 5, '10

Shanghai Composite index chart


The bulls fought hard to keep the Shanghai Composite index above the 50 day EMA and the index closed above the medium-term average on Monday and Wednesday.

The bears gathered forces and mounted a swift counter-attack on Thursday. A 'reversal day' pattern (higher high but lower close) pushed the index down below both the 50 day and the 20 day EMAs. Today's weak attempt at a pull back was resisted by the 20 day EMA.

The corrective move continues as the technical indicators begin to turn weak. The slow stochastic is about to fall from the overbought zone with the %K and %D lines touching each other. The MACD is above the signal line but remains in negative territory.

The ROC is turning down towards the '0' line. The RSI is above the 50% level and moving sideways. We have an interesting technical situation where the 20 day EMA is trying to move up, the 50 day EMA is moving down and the 200 day EMA is almost flat.

Every time a bullish pullback makes a lower top, the bears gain a little more ground. Another test of the 200 day EMA may be on the cards.

Hang Seng index chart


Unlike the bulls in Shanghai, the Hang Seng index bulls warded off Thursday's bear attack a little better. The index got support at the 20 day EMA and today's 200 point pull back took the index back up to the 50 day EMA.

The slow stochastic is at the edge of the overbought zone. The MACD is well above the signal line and about to turn positive. The RSI is above the 50% level and moving sideways. The ROC has turned down after a quick up move.

The corrective move from the Nov '09 top of 23100 has not ended yet.

Straits Times (Singapore) index chart

Straits Times_Mar0510

When I looked at the Straits Times index chart four weeks ago, it was floundering below the 20 day and 50 day EMAs. It recovered its poise slightly, but has remained in a very narrow sideways range of 60 points or so - straddling the short and medium term moving averages.

The slow stochastic is moving sideways below the overbought zone. The MACD is moving up ever so slowly but remains in the negative zone. The ROC is touching the '0' level. The RSI is also moving sideways a bit above the 50% level.

It appears that the Singapore index is treading water, awaiting a clear direction from its two Chinese neighbours.

Bottomline? The corrective moves in the chart patterns of the Asian indices is still not revealing a clear trend. Remain cautious but nimble. Buy if you see value. Get rid of non-performers.

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