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Friday, August 3, 2012

Stock Index Chart Patterns – Hang Seng, Taiwan TSEC, Korea KOSPI – Aug 03, ‘12

In a previous post 4 weeks ago, Hang Seng, Taiwan TSEC and Korea KOSPI index charts had bounced up from higher bottoms touched in Jun ‘12 and were rallying towards their 200 day EMAs. But all three indices were trading in bear markets, so readers were advised to sell the rallies or short the indices with stop-loss at the respective 200 day EMAs.

Hang Seng index chart

HangSeng_Aug0312

The one year daily bar chart pattern of the Hang Seng index made a couple of attempts to move into bull territory. On the first occasion, selling pressure near the 200 day EMA pushed the index below all three EMAs. The same fate may befall the index as it has once again moved up to test its 200 day EMA.

Technical indicators are bullish, but showing signs of weakness in upward momentum. Slow stochastic has almost reached the lower edge of its overbought zone. MACD is barely positive and rising above its signal line. ROC is also positive, but turning down. RSI is above its 50% level, but moving down.

The 200 day EMA is sliding down and the index is trading below it. That means the bears still have the upper hand. However, a continuation of the rally into bullish territory is a possibility. Only a convincing move past the 22000 level will change the trend from bearish to bullish.

Taiwan TSEC index chart

TSEC_Aug0312

Taiwan’s TSEC index is looking more bearish than the Hang Seng index. It is trading well below its falling 200 day EMA and all rallies are being used by bears to sell.

Technical indicators are mildly bullish, but showing weakening signs. Slow stochastic is above its 50% level, but its upward momentum is slowing. MACD is above its signal line, but both are in negative territory. ROC is positive but sliding towards the ‘0’ line. RSI is above its 50% level, but turning down.

The index closed 50 points lower today (Fri. Aug 3 ‘12). The down move may have resumed already.

Korea KOSPI index chart

Kospi_Aug0312

Korea’s KOSPI index made a valiant effort to test its 200 day EMA, but fell short and started correcting. The index closed more than 1% lower and below the 1850 level today.

Technical indicators are mildly bullish, but showing signs of weakness. Slow stochastic is above its 50% level, but turning down. MACD is above its signal line and just entered positive territory. ROC is positive but slipping down. RSI is above its 50% level but falling.

A bearish pattern of lower tops and lower bottoms continue.

Bottomline? Chart patterns of the three Asian indices are trying desperately to free themselves from bear strangleholds – but without much success so far. Recovery in the global economies will be a painful and long drawn out process. Asian economies will not be immune to the slow growth in global markets. Fixed income instruments may provide better returns. Alternatively, stay in cash.

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