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Friday, July 2, 2010

Stock Index Chart Patterns - Shanghai Composite, Singapore Straits Times, Hang Seng -Jul 02, '10

Shanghai Composite index chart

ShanghaiComp_Jul0210

The chart pattern of the Shanghai Composite index is a perfect example of a strengthening bear market where the bulls have lost all hopes and have turned tail.

For a while, there was a hint of a turnaround with the index moving down while the technical indicators were moving up (or staying flat in the case of the ROC). But the bears quickly nipped any bullish hopes in the bud.

All three EMAs are falling with the index below them. The slow stochastic is in the oversold zone. The MACD has gone below the signal line in negative territory. The ROC has turned negative. The RSI is below the 50% level but hasn't yet dropped to its oversold zone.

The stock is at a 52 week low and seeking support from the Feb '09 closing top of 2389. The next stop on the way down could be 2000.

Hang Seng index chart

HangSeng_Jul0210

The Hang Seng index chart had a few days of respite from the bears as it spent 6 days above the 200 day EMA that brought the 20 day EMA up to the 50 day EMA. But the bears flexed their muscles and showed that they were still in charge.

The index has once again moved below the three EMAs, and today's 224 points lower close meant the index has again dropped below the psychological 20000 level.

The RSI and slow stochastic have descended rapidly from their overbought zones. The ROC has dropped to the '0' level. The MACD is barely positive and hanging on to the signal line. The Hang Seng index may go down to test the 19000 mark.

Straits Times (Singapore) index chart

Straits Times_Jul0210

The chart pattern of the Singapore Straits Times index is desperately trying to fend off the bears. It is above the rising 200 day EMA and technically still in a bull market, but has made a lower top and has started drifting down. The entangled 20 and 50 day EMAs are providing support.

The technical indicators are suggesting that it may be a temporary respite.  The slow stochastic has dropped from the overbought zone. The RSI is slipping down after touching its overbought zone. The ROC has dropped to the '0' level. The MACD is marginally positive and touching the signal line.

The Straits Times index may move down to test support from the 200 day EMA soon.

Bottomline: The chart patterns of the Asian indices are showing the after-effects of the slow recovery in the global economy. The slow down in China is the biggest concern in the region. The indices are likely to drop to new lows. Sell on rises.

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