Uncertain Week (2011-02-28 HSI analysis)

This week would be somehow uncertain. Technical analysis on both daily and weekly chart doesn't give much hints to us. Let's see what I got this week.

Daily chart:


Hang Seng Index managed to get back above the red long-term up-trend line at the end of last week. However, it just dropped back below it. We could treat the breakout as a false one.

After almost touching the few-days low, HSI surged which gave a long white candle last Friday. It was stopped by the Moving Averages.

Good thing is MACD has turned it head upwards, leading to potental bullish cross. But we have to wait till it's confirmed.

We could expect small resistance at around 23,300 give by those moving averages, and strong one given by the red uptrend line, which is at around 23,600.

The downside will be at around 22,400. Breakdown of this level will lead HSI to the next support at around 21,600.

Weekly chart:


HSI fell below the red up-trend line for a consecutive of 3 candles. This could somehow be a confirmed breakdown. If you are more conservative, we can observe it for one more week.

We can see that the index was twice supported by the 50-day Simple Moving Average in past three weeks. Could it keep on be a strong support in this coming week? I guess not.

MACD is moving downwards and has no evidence of turning the way round.

I would have a bearish bias on the market in this coming week. Resistant should be at around 23,600.

Good luck.

Important Economic Data this week (2011-02-27)

28-Feb (Monday)
21:30 Canada GDP (4Q) {Forecast: Increase from 1.0% to 2.9%}

01-Mar (Tuesday)
11:30 Reserve Bank of Australia Rate Decision {Forecast: Unchange}
16:55 Germany Unemployment Change {Forecast: Unchange}
18:00 Euro CPI Estimate {Forecast: Unchange}
22:00 Bank of Canada Rate Decision {Forecast: Unchange}

02-Mar (Wednesday)
08:30 Australia GDP

03-Mar (Thursday)
20:45 European Central Bank Rate Decision {Forecast: Unchange}
21:30 US Change in Non-farm Payrolls {Forecast: Big increase}
21:30 US Unemployment Rate {Forecast: Slight increase}

Strategy for short-term trading on CSCL (2011-02-24 2866.HK)

2011-2012 Budget announced a series of plan to help ease the property markets, leading the rise of stock prices of property companies. I have made wrong predictions yesterday but TA on the chart will not lie.

Today I am gonna post my analysis on one of the shipping companies: CSCL (2866.HK). It appears to be quite attrative to buy this stock, anticipating a bounce of around 10% in short term.

Daily chart of 2866.HK:


I have identified a long-term up-trend line shown in red. Stock price has never been below this line since the low in May 2010.

This line can be treated as a very powerful support. Stock price touching this line can somehow be expected to bounce.

Price of CSCL now is 3.4, it still hasn't intercepted with the uptrend line. The support is at around 3.30.

MACD just dropped through 0-level, and there won't be much obstacle to the bounce due to momentum of the stock price.

Therefore, when the stock price hits 3.30, it is definitely a buy signal. The upside resistance is at around 3.60, which is around 10% of profit. Of course, you have to set your own stop loss point.

If you would like to buy it now, then stop loss point should be at just below the red trend-line. Upside target is the same, so it is around 6% profit and 4% loss, around 1:1 risk/reward ratio.

Event-driven (2011-02-23 New World Development Co. Ltd. analysis)

I guess the focus today would be 2011-2012 Budget announced by the government at 11:00am. It would definitely do some impact on the stock market. One of the topics is of course the property market in Hong Kong. So I check one of the largest property companies in Hong Kong --- New World Development Co. Ltd. (0017.HK). With the new taxes suggested by many experts and organisations, the budget is expected to have a negative influence on these property companies.

Daily chart of New World:


New World Development has been dropping along the red down-trend line for a few months. Though there were two peaks, but eventually the stock price slided downwards.

I have identified two trend-lines for this stock, as shown in red and green. The former one is a short-term and the other is a longer one.

The stock price is currently testing the long-term trend-line. There is a support at around the level of 13.5.

However, I would expect the stock price to drop below this level. The red line would probably stop the price from continuing its plunge. Therefore, support level is at around 13.2.

Volume shrinks a lot, showing a lack of confidence by investors. MACD is at a low level now, and there is no sign of forming bullish cross.

Announcement of Budget 2011-2012 will be a great event today. News trader would have to keep track of the policies announced.

Strong bullish trend (2011-02-22 EUR analysis)

Above is the 4-hour chart of EUR/USD. We can see that after Euro touched the horizontal resistant two days ago, it fell and apparently could not break this level.

The good news is Euro has ended its downwards trend (within the blue and red down-trend lines) and broke this channel from below 4 days ago. This suggests a strong bullish trend for EUR.

It is currently rising along the green up-trend line. This provides great support to this currency at around 1.364.

We will have to see whether it could break the resistant at around 1.37. And the next resistant will be at 1.386. These are the two major levels to be aware of in near future.

What would be next? (2011-02-21 HSI analysis)

After two days of rest, we could finally stop and assess carefully that whether HSI would continue its consecutive rise.

Let's see the charts of Hang Seng Index for this week.

Daily chart of HSI:


After falling below the up-trend line (in red) for few days, the index finally got its way back above the line. This indicates a false breakdown.

However, it is currently testing a short-term down-trend line (in purple). This would not be a very strong resistant, but certainly provides some power to stop the index from keep rising.

MACD just crossed its EMA from below, which signals a bullish market. Volume breakout further enhances the bullish momentum.
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Weekly Chart:


Hang Seng Index still hasn't surged back above the long-term up-trend line on weekly chart. This is a bad news.

I have indentified a short-term channel within which the index was being traded. The next resistant level would be at around 24,000.

For the downside, apart from the red line, 50-day SMA is also one of the supports as it was two weeks before. The next support level would be at around 22,600.
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To conclude, the index is testing resistance in both daily and weekly charts. Good thing is there is bullish cross of MACD and EMA in daily chart; on the contrary, it needs so much power and momentum to surge through the resistances.

If HSI keeps on surging, which is not too likely in coming few days, next resistance level would be at around 24,000.

On the other hand, 50-day SMA is the support for HSI suggested on weekly chart, which is at around 22,600.

Important Economic Data this week (2011-02-20)

22-Feb (Tuesday)
10:00 Reserve Bank of New Zealand 2-Year Inflation Expectation
21:30 Canada Retails Sales (MoM) {Forecast: Drop from 1.3% to -0.1%}
23:00 US Consumer Confidence {Forecast: Increase}

23-Feb (Wednesday)
17:30 Bank of England Minutes

24-Feb (Thursday)
21:30 US Durable Goods Orders {Forecast: Increase}
23:00 US New Home Sales (MoM) {Forecast: Drop}

25-Feb (Friday)
17:30 UK GDP (QoQ) {Forecast: Unchange}
21:30 US GDP {Forecast: Slightly Increase}
22:55 University of Michigan Confidence {Forecast: Slightly Increase}

source: http://www.dailyfx.com

Within two channels (2011-02-18 HSCEI analysis)

Above is the daily chart of Hang Seng China Enterprise Index (HSCEI). This index includes all the shares of the China-corporatred companies lised on the Hong Kong Exchange, which are called H-shares.

Basically, analyzing this index could give us hints on the whole Hong Kong market as well, due to the large impact of the China company stocks on HSI.

From the chart, we could see that last week HSCEI dropped below the green up-trend channel. Luckily, two days later it appeared to be a false breakdown as the index bounced back into the channel.

In fact, it is still sliding along the red down-trend channel. After the little bounce, it is rising towards the upper line of the red channel.

MACD just crosses its EMA from below. This is of course a bullish cross signaling a stronger buy-momentum among investors.

We could expect the index to surge a little more and reach the upper red line, which is at around 12,750. Then we have to see whether it could break out or not.

Small-cap stock (2011-02-17 Interchina Holdings Co. Ltd. 0202.HK analysis)

Above is the daily chart of Interchina Holdings Co. Ltd. (0202.HK). It surged around 7% yesterday which made me put some attention on the stock.

For the fundamental, the Company and its subsidiaries are principally engaged in (i) environmental protection and water treatment operation, (ii) property investment operation and (iii) securities and financial operation. (from http://www.aastocks.com)

I found that it is currently testing the upper line of red wedge. After breaking out, it would have another crazy boost again.

In terms of corporate investors, obviously they were buying shares at around the green wedge before. Average price was at around 0.86. The price of the stock is now 1.4, which is not even double of the buy-price of these investors.

I expect that the stock price will keep on rising in the near future to let corporate investors get bigger room of profits.

Rise in VIX (2011-02-16 VIX analysis)

Yesterday HSI was down more than 200 points, but it is still within the trading range. We all look forward to the time when the index breaks the range.



Above is the graph of Volatility Index VIX. Last time I predicted that the volatility index would surge; however, it is still at the lowest level in these years. Hang Seng Index did have a great volatility, but S&P didn't. So, VIX didn't rebound.

So I checked again today. MACD crosses its EMA from below, which means there is a bullish cross support the rise of VIX.

RSI is below 50, which means there is no strong power stopping the momentum of surge.

We can expect that VIX will start going upwards. Resistance is at level of around 18.

Rebounce of EUR (2011-02-15 EURUSD analysis)

Hang Seng Index bounced back a bit yesterday, but yet to be above the red up-trend line. It is really uncertain how HSI will move. Nevertheless, there will be a strong resistance power at the up-trend line.

Today I am going to post my analysis on Euro.



Above is the 4-hour chart of EUR/USD. We can see that it has been falling within the two red lines. It is currently testing the lower line; therefore, we can see there is a buying power when EUR reached this line.

MACD is falling to a new low level, indicating that the momentum for drop is getting weaker.

We could expect a rebound in EUR. It is a good time to get some long positions for EURUSD. Stop loss would be confirmation of breakdown of the lower line.

Did corporate know something? (2011-02-14 HSI analysis)

Hang Seng Index dramatically plunged greatly last week but was able to retrieve a bit at the end, after touching the horizontal support given by previous low and highs.

Despite of the amazing rebounce, we could not deny that the index already broke down the red up-trend line on both daily chart and weekly chart.

As usual, I have analyzed HSI and hopefully could predict the movement this week.

Daily chart of HSI:



Obviously, the index already broke the red up-trend line with a big gap. This is a typical breakdown. If it holds below the up-trend line for 1-2 more days, we could confirm the breakdown and have a more bearish bias on the market.

The long down shadow on Friday's candle really leaves a question mark to investors. Normally, it is a bull signal as it is a bull rejection, which tells us that investors are still quite optimistic on the market. However, considering the consecutive falls and breakdown last week, it is really not convincing to say that investors are optimistic. This candle might be just a rebounce followed by another big bearish wave.

MACD is falling and has no signal of showing bullish cross. We can anticipate a further slump.

Weekly chart of HSI:



Weekly chart tells us that HSI broke down the red up-trend line and reached the support and bounced. This is the same as that on daily chart.

We can expect that HSI could be within the trading range between the red line and the blue line.

MACD crosses its EMA from above. This is a bearish cross. We should hold a more bearish view on the markets.

However, there is one more point to add, the volume last week was extraordinary high. Are the corporate investors buying all the shares or selling all the shares? It seems like retail investors would not have such confidence to buy that many shares (in other words, corporate investors could not simply sell that high volume). If so, the corporate investors should have known something that could lead the boom of stock market.

After thinking so, I feel like I have made a big mistake selling all my stocks last Friday.

Important Economic Data this week (2011-02-13)

This week will be a week full of inflation-issues, especially in China.

14-Feb (Monday)
05:45 New Zealand Retail Sales (MoM) {Forecast: Drop from 1.5% to -0.4%}
10:00 China Trade Balance (USD) {Forecast: Drop from $13.08B to $10.20B}

15-Feb (Tuesday)
Bank of Japan Rate Decision
08:30 Australia Reserve Bank's Board Minutes
10:00 China Consumer Price Index (YoY) {Forecast: Increase from 4.6% to 5.3%}
15:00 German GDP {Forecast: Drop by 0.2%}
17:30 UK Consumer Price Index (YoY) {Forecast: Increase by 0.3%}
18:00 Euro-Zone GDP {Forecast: Increase from 0.3% to 0.4%}
21:30 US Advance Retail Sales (JAN) {Forecast: Drop by 0.1%}

16-Feb (Wednesday)
17:30 UK Jobless Claims Change {Forecast: Less Negative}
18:30 Bank of England Inflation Report

17-Feb (Thursday)
21:30 US Consumer Prince Index (YoY) {Forecast: Increase from 1.5% to 1.6%}

18-Feb (Friday)
17:30 UK Retail Sales {Forecast: Increase from -0.3% to 0.2%}
20:00 Canada Consumer Price Index {Forecast: Unchange}

JPHK Update (2011-02-11)

Well I have sold at the worst time. But it is really uncertain to decide whether HSI broke down or not. Let's see next week.

Sell all in JPHK

0710 @ 3.58
1638 @ 2.62
3335 @ 1.65
3813 @ 1.26
1229 @ 1.46

Over-performed China Stock market (2011-02-11 SSEC analysis)

Yesterday was an interesting day. HSI dropped slightly less than 2%, while SSEC rose 1.59%. Many of us may wonder, will HSI tend to move towards SSEC, or SSEC will reverse direction and follow the trend of HSI?

Daily chart of SSEC:


The index has been sliding along the red wedge for over two months. Recently, it broke the upper red line. It shows that the bull power is quite strong.

On the other hand, I have identified a short-term pitchfork which is shown in purple. SSEC is currently testing the middle line of the fork. It acts as a resistant to the index.

If SSEC breaks the middle line of the fork, next resistance will be at next fibs-level, which is around 2855.

However, before understanding the weekly chart, do not be too confident on the breakout on daily chart.

Weekly chart of SSEC:


The long red line represents a long-term resistance to the index. Though there were a few false breakouts two months ago, it dropped back below the resistance then.

SSEC is currently testing the red line again.

Also, I have drawn two parallel up-trend lines (in green). SSEC broke down the triangle from above. This time, SSEC moves towards the end of the triangle. Would history repeat itself? Time will tell.

One more thing to add, volume has shrunk significantly. This is a bad signal for the index.

To conclude, there are pitchfork and down-trend line as resistances on daily and weekly chart respectively. Volume dropped greatly which tells us that investors lack confidence on stocks now. We could expect SSEC to drop, and will test the green up-trend line.

JPHK Update (2011-02-10)

Final trading day tomorrow for this week, it is likely that we can confirm HSI breakdown on weekly chart. Will sell if tomorrow keeps on dropping.

Small-cap stock (2011-02-10 Mainland Headwear Holdings Ltd. 1100.HK)

Above is the daily chart of Mainland Headwear Holdings Ltd. (1100.HK). The principal activities of the Group are manufacture and sales of headwear products, sales of licensed products and tourist-souvenir products. (from http://www.aastocks.com)

After maintaining the level of around 0.85 for over a year, the stock price suddenly surged greatly in late November 2010 to as high as around 1.72.

Obviously, corporate investors are holding this stock and would like to make fast profits from it. They have pulled the stock price upwards. However, they could not sell all the shares in such a short time.

Furthermore, 1.72 is just about double of 0.85. Those investors would not be satisfied with such small profits. They will definitely try their best to raise another wave to maximise their profits.

I would expect the price will be up to at least 1.72 first. Then if it breaks, around 2.55 will be next target.

JPHK Update (2011-02-09)

Today HSI broke the uptrend line in weekly chart. There are two days left to confirm whether it will break down or not. False breakdown is still possible. If we confirm breakdown, we should sell most of our stocks.

Great move coming (2011-02-09 GBPUSD analysis)

Above is the 4-hour chart of GBP/USD. The currency has been moving up along the red up-trend line for a month. Therefore, we can expect it to keep on being a strong support for GBP, which is at around 1.605.

Also, I applied fibonacci projection on the breakout of pennant. Basically, the surge fits the fibs level. So the next level would be at around 1.607 together with the red up-trend line. We can anticipate consolidation for 2-3 candles.

After GBP boosted to the top, the candle showed a big bearish rejection. This could be a signal about topping of the currency.

The few moving averages converge together now. Exchange rate would have a big fluctuation, either upwards or downwards. We have to see whether the red up-trend line could successfully support it.

If YES, GBP will re-test the last high, and possibly heading up to 100% fibs level.

If NO, next support given by the green down-trend line will be at around 1.59.

JPHK Update (2011-02-08)

Match in VIX and HSI (2011-02-08 VIX analysis)

As mentioned, today I would post my analysis on VIX to find out whether my forecast on HSI would be likely or not. It seems like everything matches.

Daily chart of VIX:


Obviously, volatility index has dropped to very low recently. It is also forming a wedge (the red and green lines). The index touches the green line. As long as it doesn't break down, it would definitely jump up again. Therefore we could expect an increase in volatility in coming future.

If it even breaks the red line, the surge/slump of HSI would be so great and to very great extent. Becareful everyone.

JPHK Update (2011-02-07)

What's next? (2011-02-07 HSI analysis)

Wish all readers happy chinese new year and, of course, a profitable year. While it is so difficult to predict what would happen or what the index would be in the end of 2011, we can still make anticipation on the movements in near future.

The coming two weeks would be quite important as it would affect the future HSI movements in longer term (which is shown in the weekly chart). Let's see the daily chart of HSI first.



I have identified few trend lines which could possibly hinder the index. Basically, HSI is currently hung in the middle of the trend lines, between the support and resistant. It is quite hard to tell which way it will go next.

MACD is nearly zero currently. The line is near its EMA, creating potential to form bull cross. However, there is not much evidence on whether the formation will succeed or not.

Let's see the weekly chart which gives more clues to us.



The green up-trend line and orange down-trend line form a wedge. The index is almost at the end of the triangle, suggesting an boost in volatility few bars later. The next bar will be a consolidation.

MACD will move towards zero-level in the next week. We have too keep an eye on whether it will breakout or breakdown. This determines how the index would move in the next few weeks or even months.

I will analyze VIX tomorrow.

Important Economic Data this week (2011-02-06)

10-Feb (Thur)
08:30 Australia Employment Change {Forecast: From 2.3K to 20K}
08:30 Australia Unemployment rate {Forecast: Unchange}
20:00 Bank of England Rate Decision (FEB) {Forecast: Unchange}

11-Feb (Fri)
22:55 US U. of Michigan Confidence

source: http://www.dailyfx.com/

JPHK Update (2011-02-02)

Wish you all a happy lunar new year! Enjoy your next few days off with your family and see you next week.

Currency comes the third (2011-02-02 US Dollar Index analysis)

Today the market will be opened half-day only.

The Eygpt matter brought oil to new high and the currencies changed greatly as well. USD kept on dropping, leading the other currencies to higher levels. Aussie rose above 1.0 and is heading to the high in December 2010. Though Reserve Bank of Australia remained the interest rate unchanged (at 4.75%), this appears to be an attractive rate to investors, especially when the atmosphere for stock markets isn't that good.

Let's see the daily chart of US Dollar Index.



The green line is basically the bottom line for the index. This is a very strong support and indeed if the price breaks it, I couldn't imagine how low DXY could fall to.

We can see that DXY formed three peaks from mid of Q4 2010 to Q1 2011. Though the levels were not too near, I would still treat it as triple tops.

The thick blue line represents the "neckline". Obviously the index broke it in early Q1. This accounts for the slump of DXY. The estimation given by the triple top suggests that the index would drop until 76, which aligns with the support level by the green line.

We could expect that US Dollar will keep on dropping while other currencies gain. 76 will be the next support, this is a critical support and is likely to successfully prevent the index from further retreat.

JPHK Update (2011-02-01)

Time for gold (2011-02-01 Gold analysis)

HSI bounced after dropping as low as around 23,285 yesterday, which still hasn't reached the level 23200 I mentioned in last post yet. The index probably would drop again until this support level.

Due to Egypt matter, the world's investing atmosphere is shrinking. Stock markets as well as commodity market have been sliding. Gold reached 1338 last week and rebounded a bit. This time I would like to share my analysis on Gold (XAU).

Daily chart of gold price:


I have identified three major trendlines which could affect the price of gold now. This first one is the green one, which has been a support for the price in longer term. Gold price stayed above this line since 2009 and it remains a major support. So basically we could assume a very strong at the level suggested, which is around 1290.

This second line is the red line, which is a middle-term trendline. It has been a resistant in early stage, turned into support in middle stage and became resistant again after gold price broke it in mid-January 2011. It acts as a resistant to the price now.

The third line is the purple one, which is a short-term trendline. We can see that the price has been falling along this line since late December 2010. This would be a resistant to the price now as well.

Good news is MACD is currently touching its EMA, a bullish cross is under formation. We need two more days to confirm it. Bad news is the price did try to test the resistant zone yesterday but wasn't able to break it. It seems like the gold price would undergo a bit consolidation.

Let's check the weekly chart as well.

Weekly chart:


Basically the red and green lines are the same as that in daily chart. I have only made tiny adjustments on the slopes of them.

Clearly MACD is falling with no signal of reversing. We could expect no sharp reversal in price movements. The fibonacci retracement suggests a support at around 1295, which aligns with that given in daily chart.

To conclude with both charts, I would expect a slight consolidation in gold price. In daily chart, MACD and EMA might show good signals but it is hard to tell due to that in weekly chart. Support level is at around 1290-1300, and resistant is at around 1350-1360.