Filling the gap (2011-06-30 HSBC analysis)

Above is the daily chart of HSBC (0005.HK). Because of the continuing slump of Hang Seng Index, HSBC simply could not do anything but to follow the drop.

We can see that the red solid line has been resisting the stock price for over four months, and is expected to do so again when the price bounced to around 78.

The reason for the bounce is that in mid June there was a large gap down. I think its time for it to refill the gap, and it would probably reach 78.

75 looks like a strong ground now. So after reaching 78, it would fall again to 75 and consolidate. Whether it would break down or not depends on the whole market in general.

Short-term Bounce (2011-06-29 GBP analysis)

Above is the 4-hour chart of Sterling. After BOE announcing low interest rate, the bearish trend just can't be stopped.

Currently it has reached its support line again, as shown in green. The line could provide some support to the pound, pushing the price up to a certain level.

On the other hand, the red line is the short-term resistance. We can see that it is currently at around 1.627; therefore, we would expect a strong selling force at this level if GBP could bounce back there.

One more evidence supporting the bounce of Sterling is that MACD reaches support line as well. This may stop MACD from dropping further and thus the price would not continue sharp falling.

So the overall picture still tends to be bearish, but there would probably a short-term bounce to 1.627.

Strong resistances (2011-06-27 HSI analysis)

There wasn't much serious/important happened last week. The globe markets were still led by the Greek debt problem. HSI first plunged and then bounced a bit.

For forex, the pound was dropping severely due to BOE's announcement of keeping the interest rate low. US Dollar generally gained due to the end of QE2.

So how's this week.

Edited at 10:20am: Charts were drawn and this blog was written this morning before the market opened, but I just found that I had made a mistake posting it out. HSI was down to almost 21900 and then gained a bit, going back above 22000 now. The overall big picture described below is still the same.

Daily chart of Hang Seng Index:


HSI was well supported last week by the green down-trend line, we could see a nice bounce after it reached the support.

Orange line is the very short-term down-trend line which has relatively weaker strength, but from it we can know the index has turned into bullish trend in short-term. So the crazy drop should have come to an end.

The two red lines (solid and dotted) are resistances, but they are still far away so we could ignore them at the moment. We just know to keep in mind that 22,800 would be strong resistance level for the index.

I have applied a Pitchfork as well. The lower line has been doing well on keeping the pace of plunges of HSI. Now, after the index bounced, it reached the middle line of the fork. We could expect a little resistance here, but it is relatively weak as well.

Next support will be given by the green line which is at around 21,600, and resistance should be at the upper line of Pitchfork (around 22,300).

Weekly chart of HSI:


On weekly chart, the green and red solid lines are the same as those on daily chart. We can see there is a resistance area ranged from 22400 to 22800, and the index would face a strong selling force while reaching this area.

I have drawn another Pitchfork on weekly chart. This time the upper line well resisted the index from surging beyond. The index reached the middle line two weeks ago, and bounced last week. The upper line will be resistance again.

Together with the red down-trend line, there are actually three strong resistances up there. I think in short-term the index can go up to around 22800, but it would slump again as the selling force there is really strong. It is hard to break out given the current poor investment atmos

Important Economic Data this week (2011-06-26)

27-Jun (Monday)
20:30 US Personal Income {Forecast: Unchanged}

28-Jun (Tuesday)
14:00 German GfK Consumer Confidence Survey
16:30 UK GDP (YoY) {Forecast: Unchanged}
22:00 US Consumer Confidence {Forecast: Slight increase}

29-Jun (Wednesday)
Germany CPI (YoY) {Forecast: Unchanged}
19:00 Canada CPI (YoY) {Forecast: Unchanged}

30-Jun (Thursday)
15:55 Germany Unemployment Rate Change {Forecast: More negative}
20:30 Canada GDP (YoY) {Forecast: Slight decrease}

1-Jul (Friday)
07:50 Japan Tankan Large Manufacturers Outlook
09:00 China PMI Manufacturing {Forecast: Slight drop}
21:55 US U. of Michigan Confidence {Forecast: Slight increase}
22:00 US ISM Manufacturing {Forecast: Drop}

Trend reversed? (2011-06-24 SSEC analysis)

Above is the daily chart of Shanghai Stock Exchange Composite (.SSEC). The chart tells us that probably the China market has turned its direction, and could lead Hong Kong market to turn as well.

The composite has been sliding along the green down-trend line since April 2011, and it could never cross above this line.

However, yesterday SSEC finally made its way above the line, with a big white candle. This suggests that the few-month bearish trend may have come to an end.

Volume surged as well, further confirming the break out. But it takes two more days to make sure it is not a false break out.

MACD and its EMA shows a bullish cross signal too. But we have to be extremely careful of zig-saw patterns which appears several times in past few months.

So next, how much would it go? By using a fibonacci retracement, SSEC probably stops at around 50%, which is around 2800.

So this is hopefully a temporary stop for such a bearish market.

Low interest rate (2011-06-23 GBP/USD analysis)

Above is the daily chart of GBP/USD. After BOE announced that it would keep its interest rate low, sterling slumped hardly and reached 1.60.

The red line is the long-term up-trend line, which was a support to the pound until five days ago. And now we could confirm its breakdown. GBP has turned into a bearish trend.

Trying to find its support, I applied two tools on the chart. First one was the fibonacci projection, using the high in April and level when pound broke down. It seems like 1.56 is its ground, but 1.59 would definitely have strong support too.

Another tool was the Andrew's Pitchfork. It suggests a much lower support than fibonacci, and its slope is quite steep, telling us that the pound would plunge in a sudden.

Gold and Silver (2011-06-21 XAU, XAG analysis)

The index opened high but closed low yesterday, it did break the support in weekly chart (yet to be confirmed).

Let's look at the commodities today.

Daily chart of Gold (XAU):


The gold price has been on a upward trend along the green line for some time, and obviously 50-day Simple Moving Average was helping to support the price as well.

The short term down-trend line in red, starting from the high in April 2011, acts as a resistant to the gold price, stopping it from moving any further.

Currently, gold price is testing the red resistant again. Breaking out would mean going even above the previous high in April 1576.

MACD and its EMA are touching each other, having the possibility of bullish cross. But it depends on further movement of Gold.

On other hand, support is at around 1527 (the green line). These are the levels to be aware of.

Daily chart of Silver (XAG):


Chart of silver looks more lousy. Same as gold, there is a long-term up-trend line (in green) which has been supporting Silver for more than a year.

After the big slump in April 2011, it looks like a flag shape has developed (red and green lines). This isn't a good sign as this signals continuation of bearish trend.

Resistance level is at around 36.2 and 35 is the next support. If it breaks down, I would expect the price reaching 30. If it breaks out, it could be back to 40 and consolidate.

Bounce this week (2011-06-20 HSI analysis)

Hello everyone. Last week was a disaster for the world's stock markets, with most of the indexes dropped severely. HSI plunged from 22420 to 21695, which was over 3% drop. Financial concerns in Europe appeared to be the reason behind, but Euros and Pounds were able to recover quite a lot from slump last Friday.

So this week's movement depends on whether HSI would find its ground like what DJI and FTSE did last Friday. Let's see the charts below.

Daily chart of HSI:


On the daily chart of HSI, it is obvious that the index breaks below the red down-trend line. This indicates weakening of the index, and may turn into bearish trend if the break down confirms.

Good news is that volume did surge a bit, saying that investors were having positive view on the market. MACD reached its support line too, it would probably bounce.

Green dotted line is the previous down-trend line which provides support, though its far away.

Weekly chart of HSI:


On the above chart, we can see that HSI was well supported above the red down-trend line. This was the level I mentioned last week.

Also, the index slumped below the lower bound of bollinger bands. There would be a strong buying force pushing the index upwards.

Volatility will undoubtedly rise this week. This can be shown by the convergence of 20 and 50 SMA, by historical evidences. And it is more likely that the vol would lead HSI upwards.

Short term resistance is at 22,300, and the index should fall again after reaching the resistance.

Good luck.

Important Economic Data this week (2011-06-19)

Happy Father's Day! Let's see what economic data would be revealed next week.

20-Jun (Monday)
15:00 Germany Producer Prices {Forecast: Slight decrease}

21-Jun (Tuesday)
10:30 Australia Reserve Bank's Board June Minutes
18:00 Germany ZEW Survey (Economic Sentiment)
21:30 Canada Retail Sales {Forecast: Slight increase}
23:00 US Existing Home Sales {Forecast: Decrease}

22-Jun (Wednesday)
17:30 Bank of England Minutes

23-Jun (Thursday)
01:30 US FOMC Rate Decision {Forecast: unchanged}
23:00 US New How Sales {Forecast: Big Drop}

24-Jun (Friday)
21:30 US Durable Goods Orders {Forecast: Increase}

source: http://www.dailyfx.com

What USD tells us (2011-06-16 DXY analysis)

1043.HK had a nice false breakout yesterday, it still isn't good time for buying given the poor market conditions...

Concerns about Greek debt had further pulled the Euros downwards, leading higher US Dollar and hence DXY Index. Let's see.



Above is the daily chat of US Dollar Index (.DXY). DXY containing over 50% of EURO/USD, there is no surprise that the plunge of EUR resulted in the surge of DXY.

On the daily chart, we can see that the index just breaks the red down-trend line, which DXY has remained below since Jan 2011.

MACD and its EMA gave a BUY signal as the former one crosses the later one from below. RSI is pretty high so this could bother the surging of the dollar.

Through drawing a fibonacci projection using the previous low and high, 77.07 is the next resistance level. However, the previous high could probably act as a resistant as well, which is at around 76.2. So these two levels are critical ones.

Of course, it still takes one to two more days to confirm the breakout, and whether it has turned into bullish trend. If breakout happens, then it has big impact on other markets.

Rise in USD would attract more investors to invest on money market by removing money from stocks and commodities, so these two markets would drop. Bond yield drops and bond price rises. Euros would definitely drop (as it is the major component of DXY).

Good luck.

Small-cap stock again (2011-06-15 1043.HK analysis)

Above is the daily chart of Coslight Technology International Group Ltd. (1043.HK).
The principal activities of the Company and its subsidiaries are research and development, manufacture and sales of rechargeable batteries and battery related accessories. (source: http://www.aastocks.com)

On the chart, we can see that the stock was moving within 4.24 and 4.80 for a few months before plunging hardly to below 3. The range is definitely a resistance zone.

However, according to my observation, it seems like the price would be lifted again by corporate investors. Large drops from March to May gave us hints that corporate investors might want to frighten the retail shareholders off so they can hold more shares and it would be easier for them to push the price upwards.

The red line is a long-term down-trend line which acts as resistant now. If the price could break out, together with my expectation on breaking out of 4.24 as well, the stock price would reach 4.80. This level is a strong resistance due to the fact that many retail investors might have bought within the range in last Oct to Feb this year.

So this stock is probably worth putting under watch-list, breaking out means a good buy signal.

Reaching support zone (2011-06-13 HSI analysis)

After Trichet's talk about not changing the terms of Greek bonds, the worries about default by Greece were further enhanced, leading plunges of Euros. US Dollar rose, resulting in drop in commodities and stock markets.

Last week Hang Seng Index experienced another consecutive drops. reaching as low as around 22,300. This was within the support area I mentioned last week.

Daily chart of HSI:


On last Tuesday, we could see the HSI dropped below the down-trend line in red. Then it started to move lower.

Consecutive slumps were not a surprise. And we could expect support at around 22,350. This was shown by the longer lower shadow last Thursday, and the buying force there last Friday.

The bottom line should be at around 22,100. The index has been above this level since last September, and if it breaks down, it isn't hard to find HSI dropping below 21,000.

Good news is that the volume spiked despite of the lower levels. Investors are believing that the index would bounce after dropping to such a strong support.

The resistance is at around 22,800, due to the red solid line.

Weekly chart of HSI:


The chart looks a bit messy with lots of lines; however, they give us a lot of hints on how HSI is going to move.

Dotted lines (in green, red and blue) are relatively useless lines. Though the index dropped below the blue up-trend line, as we could not see many points on this line, it should be relatively weak.

Instead, green solid green appears to be the next support to the index on weekly chart. The level is as low as around 21,700. Not too far, but this also means that HSI falls below the horizontal area on daily chart. This should be bottom line.

Resistance is the same at around 22,800.

So this week pretty depends on the CPI announced in China which might signal change in interest rate, and how ECB is going to solve the financial problem in Europe.

Good luck.

Important economic data this week (2011-06-12)

14-Jun (Tuesday)
Bank of Japan Rate Decision {Forecast: Unchanged at 0.1%}
10:00 China Consumer Price Index {Forecast: Slight increase}
16:30 UK Consumer Price Index {Forecast: Unchanged}
20:30 US Advance Retail Sales {Forecast: Drop of 0.5% to -0.4%}

15-Jun (Wednesday)
16:30 UK Jobless Claims Change {Forecast: Drop from 12.4K to 6.5K}

16-Jun (Thursday)
15:30 Swiss National Bank Rate Decision {Forecast: Unchanged at 0.25%}
17:00 Euro-Zone Consumer Price Index {Forecast: Unchanged}

17-Jun (Friday)
21:55 U. of Michigan Confidence {Forecast: Slight drop}

Quick profits (2011-06-10 Tanrich Financial Holdings analysis)

Yesterday HSI was down again, but wasn't too much. We could see there was a strong buying force at around the support.

So is there any opportunity for quick money?

Daily chart of Tanrich Financial Holdings (0812.HK):


The principal activities of the Group comprise: wealth management, brokerage and margin financing, insurance agency, corporate finance, asset management, money lending, and proprietary trading. (from aastocks.com)

Starting from last September, this stock has surged from around 0.3 to almost 2.0 today! It's a great boost, isn't it?

However, following the long white candle yesterday, it attracted my attention to see whether it could keep its up-trend.

We can see that the price breaks the previous high, and closed at the high. This signals an extremely strong bullish force for the stock.

This might be a chance to grab some profits. If corporate investors who hold lots of shares want to push the price upwards, the price should at least be higher than the previous high for around 10%. But the risk is that they are going to sell after a sharp push, so we have to be absolutely careful. Set a stop gain, and leave quickly.

Good luck.

Anything happens next? (2011-06-09 VIX analysis)

Yesterday Hang Seng Index experienced another almost 1% slump, reaching the upper line of the horizontal area identified on Tuesday's post on daily chart, and breaking down the up-trend line on weekly chart.



Above is the daily chart of volatility index (.VIX). We could use it to predict the volatility of HSI too.

Red line is the very long-term down-trend line providing resistance force to the index. However, at this stage it seems not that influential.

Currently the trading range of VIX is broadening, indicated by the purple lines on the above chart. The support level is at around 17.

On the other hand, the three simple moving averages are converging together. This signals a larger movement as shown before as well, either to the upside or slump.

MACD is moving upwards slowly. This would probably tell us that VIX is going to surge instead of dropping. Would it break the upper purple line this time?

If it does, then the next resistance will be at the red line, at around 24, which is an extremely big movement by S&P. As the lower line is at an extremely low level, I don't think break down looks possible.

Maybe something's gonna be revealed.

Breakout (2011-06-08 GBP/USD analysis)

Above is the 4-hour chart of GBP/USD. From the chart, it seems like the pound is going to surge crazily again.

On the above chart, I have identified several lines. Most influential ones are the solid lines in green, blue and purple, but after the break out, the blue and purple lines are relatively useless at this stage.

The two green lines were resistances, and have become support now. These lines would be support when sterling retreats.

So this time I expect GBP to surge to the high in late April. Ultimate support would be at the horizontal blue line at around 1.630.

Good luck.

Hard to tell (2011-06-07 HSI analysis)

Following the end of my 1-week trip, my undergraduate study has come to an end. This indicates start of another life :)

Anyway, Hang Seng Index jumped last week above the trend line, but the great slump on Friday led the index to be back under the line. Let's check below.

Daily chart of HSI:


We could see that currently the index is still within the area between red down-trend and green up-trend lines. Obviously the sudden jump last week was not well supported.

Again, the green line and the horizontal area would act as support, which we could expect the index to bounce at around 22,500-22,600.

Red line should have a pretty strong resistance this time. 50-day simply moving average will help stopping HSI too.

Weekly chart of HSI:


On this chart, it is clear that the index is restricted within the area formed by red and green solid lines, even when there was long lower and upper shadows in past two weeks.

It is really hard to tell which way it would break. The only thing we know is that resistance is at around 24,500 and the support is at around 22,000 should it break out or down.

Important Economic Data this week (2011-06-05)

I am Back! Let's see what data would be revealed in this coming week.

6-Jun (Monday)
17:00 Europe Producer Price Index {Forecast: Slight decrease}

7-Jun (Tuesday)
12:30 Reserve Bank of Australia Rate Decision {Forecast: Unchanged at 4.75%}
17:00 Europe Retail Sales {Forecast: Increase}

8-Jun (Wednesday)
17:00 Europe GDP {Forecast: Unchanged}

9-Jun (Thursday)
05:00 Reserve Bank of New Zealand Rate Decision {Forecast: Unchanged at 2.5%}
07:50 Japan GDP {Forecast: Less Negative}
09:30 Australia Unemployment Rate {Forecast: Unchanged at 4.9%}
19:00 Bank of England Rate Decision {Forecast: Unchanged at 0.5%}
19:45 European Central Bank Rate Decision

10-Jun (Friday)
14:00 Germany CPI {Forecast: Unchanged at 2.3%}
19:00 Canada Unemployment Rate {Forecast: Unchanged}