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Friday, June 4, 2010

Stock Index Chart Patterns - Shanghai Composite, Singapore Straits Times, Hang Seng -Jun 04, '10

Shanghai Composite index chart


The chart pattern of the Shanghai Composite index failed to move above the falling 20 day EMA and the bulls seem to have thrown in the towel. The index not only closed below the Sept '09 low of 2640, but also below the psychological level of 2600 on all 5 days of the week.

The last straws for the bulls are the May 21 '10 low of 2482 and the Feb '09 top of 2403. If those two levels are broken, the index may go down to the 2100-2200 band to search for some semblance of support.

The technical indicators have turned weak again. The slow stochastic and RSI have dropped down after reaching their 50% levels. The MACD is above the signal line, but remains negative and has stopped rising. The ROC has moved back into the negative zone after touching the '0' level.

Hang Seng index chart


The Hang Seng index chart pattern made a valiant effort to reclaim the 20000 level, but the falling 20 day EMA proved a tough barrier. The volumes were not strong enough to sustain the up move. All three EMAs are moving down with the index below them. The Hang Seng index is in a bear market.

The technical indicators have improved during the week. The slow stochastic is rising towards the 50% level. The MACD is above the signal line and moving up inside negative territory. The ROC has reached the '0' level. The RSI is moving sideways below the 50% level.

Straits Times (Singapore) index chart

Straits Times_Jun0410
The Straits Times index chart pattern is faring a little better than the two Chinese indices. After spending a few sessions below the 200 day EMA, it spurted above the 200 day and 20 day EMAs and closed the week above the psychological level of 2800.

Technically, the index is not in a bear market. The 20 day and 50 day EMAs never went below the 200 day EMA. But the troubles for the bulls won't be over till both the index and the 20 day EMA move above the 50 day EMA.

The technical indicators are showing a bit of bullishness. The slow stochastic is below the 50% level but moving up. The MACD is above the signal line in negative territory, and has started rising. The ROC is negative but gaining height. The RSI is below the 50% level and not going anywhere.

Bottomline? Both the Chinese index chart patterns are in bear markets. The Singapore chart pattern has managed to extricate itself from a tight bear hug, but hasn't regained a position of safety. Investors need to wait patiently and buy only when they perceive good value.

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