Power? (2010-06-30 China Construction Bank analysis)

China Mobile showed rise today due to the successful bid for the frequency for mobile television broadcast. However, I would still be bearish on this stock just as what I said in the morning (HKT) as this news will soon be digested.



So let's switch the industry to banks. Above is the daily chart for China Construction Bank (0939.HK). Today was ex-dividend day so CCB went down 20.2 cents automatically. Though there is external factor affecting the chart, we could still try to rely on it and see how CCB would perform afterwards.

As we can see, after the dividend issue, CCB opened low and tried to surge to break that resistance area. However, it still does not have enough power to break it. Tomorrow would be a holiday in Hong Kong. So let's see what happens on Friday. Once it really breaks the area, we might assume it to go back to 6.6. But more likely it would bounce back and reach the red support line, which could probably lead to further breakout and plunge.

Resisted again (2010-06-30 China Mobile analysis)

Above is the daily chart for China Mobile (0941.HK). There is a very strong resistance area 79.9 - 81.3 which bounces back the price every time it attempts to break starting from last September. The recent one was no exception. The market plunged very greatly yesterday due to concern over China slowing growth and American lower consumer confidence. China Mobile slumped just as most of the other stocks. Both MACD and stochastic are turning bad showing a further downtrend. The support would be at the red line which is at around 72. That means there is still around 6-7% till the support zone.

The news effect would be expected to last for around a week. So this week I am bearish on the markets.

Bloomberg News (2010-06-29)

Stocks Slide, Treasuries Jump on Concern Over China, Confidence

By Rita Nazareth and Stephen Kirkland - Jun 29, 2010
url: http://www.bloomberg.com/news/2010-06-29/asian-stocks-fall-to-two-week-low-yen-strengthens-on-china-growth-concern.html

Stocks plunged from Shanghai to New York, with the Standard & Poor’s 500 Index sinking below its lowest closing level of the year, and Treasury two-year note yields dropped to a record low on concern over weakening growth in China and lower-than-estimated U.S. consumer confidence.

The S&P 500 slid 2.5 percent to 1,047.45 at 11:53 a.m. in New York, its lowest on a closing basis since November 2009. The MSCI World Index of 24 developed nations lost 2.9 percent, while the Shanghai Composite Index tumbled 4.3 percent. The benchmark 2012 Treasury note yield slid as low as 0.5857 percent and the 10-year yield dipped below 3 percent for the first time in 14 months. Oil and copper slumped at least 3.4 percent.

“It’s ugly out there,” said James Paulsen, who helps oversee about $375 billion as chief investment strategist at Wells Capital Management in Minneapolis. “Consumers are pulling back. There’s concern about a China slowdown. We’re close to important technical levels on the S&P 500, with 1,040 being closely watched. It’s end of quarter, investors have to close their books and they are selling the stocks that did poorly.”

The tumble in global stocks started after the Conference Board said its leading economic index for China rose 0.3 percent in April, less than the 1.7 percent reported June 15. Losses accelerated after the same research group’s gauge of U.S. consumer confidence slumped to 52.9 in June, less than all 71 projections in a Bloomberg News survey of economists.

Jobs, Europe Concerns

Today’s data damaged investor confidence amid concern a Labor Department report July 2 will show the U.S. lost jobs for the first time this year, while European bank balance sheets come under heightened scrutiny as a lending facility from the region’s central bank expires.

The rate banks say they charge each other for three-month loans in euros rose to 0.688 percent in London, the highest in eight months, as institutions hoarded cash before a 12-month European Central Bank lending facility expires later this week.

European banks need to repay 442 billion euros ($540 billion) in 12-month loans to the ECB by July 1, the biggest amount ever awarded by the central bank. Demand for three-month cash from the ECB tomorrow will expose how much banks still rely on the central bank for funding, investors and economists said. The ECB will announce how much money banks have asked for at about 11:15 a.m. in Frankfurt.

‘Funding Pressures’

“Concerns about funding pressures are creeping in again,” said Alexander Titsch-Rivero, head of derivatives and structured products in Frankfurt at BHF-Bank AG, a German private bank. “Some banks seem to be concerned about the ECB’s 12-month loans expiring. Definitely some banks seem to have built up huge bond positions financed with this one-year ECB tender. Now you have a roll-over gap and that seems to make people nervous.”

The S&P 500, the benchmark gauge for U.S. stocks, retreated for the sixth time in seven days even after a report showed home prices in 20 U.S. cities rose in April from a year earlier as sales got a boost from a tax credit. The S&P/Case-Shiller index of property values climbed 3.8 percent from April 2009, the biggest year-over-year gain since September 2006. The gain topped the median forecast of economists surveyed by Bloomberg News.

Four hundred ninety-seven stocks in the S&P 500 fell, while 99 companies in the Nasdaq 100 Index were lower. Among 24 industry groups in the S&P 500, none had an average loss smaller than 0.8 percent, according to data compiled by Bloomberg.

Boeing Co., Caterpillar Inc. and General Electric Co. tumbled more than 4 percent to lead losses in all 30 Dow Jones Industrial Average companies as the 30-stock gauge slid 235.95 points to 9,902.57, its first trip below 10,000 in more than two weeks.

Global Retreat

All 10 industry groups in the MSCI World Index declined at least 1.6 percent, led by basic-materials producers and financial companies. The gauge has lost 9.9 percent this year. The MSCI Asia Pacific Index dropped 1.5 percent today as Japan’s unemployment rate unexpectedly increased.

The yield on the 10-year Treasury security slid as much as 7 basis points to 2.95 percent, the lowest since April 2009. Treasuries have climbed 5.7 percent this year, according to indexes compiled by Bloomberg and the European Federation of Financial Analysts Societies. The 10-year Australian bond yield dropped nine basis points to 5.13 percent, and the yield on the German bund retreated two basis points to 2.56 percent.

Yen, Dollar

The yen appreciated against all 16 major currencies and the dollar strengthened against 14 on demand for assets perceived to be the safest.

Metals declined for the first time in four sessions on the London Metal Exchange, led by a 5.5 percent drop in zinc and 5.9 percent plunge in lead. Copper fell 4.5 percent to $2.9515 a pound in New York, extending its decline this year to 13 percent. Gold slipped 0.2 percent to $1,236.97 an ounce, trimming this year’s gain to less than 13 percent. Oil for August delivery slumped 3.4 percent to $75.63 a barrel on the New York Mercantile Exchange.

The MSCI Emerging Markets Index fell 2.8 percent, the most since May 25, extending this year’s drop to 6.5 percent. Benchmark indexes in Russia, the world’s largest energy supplier, Poland, Ukraine, Romania, Saudi Arabia, Dubai, Indonesia and Egypt lost more than 2 percent.

The New York-based Conference Board cited a calculation error for the revision in its Chinese index. The research group’s outlook for the nation’s economy hasn’t been affected by the correction, said William Adams, the group’s resident economist in Beijing.

‘Moderation is Possible’

“Growth was not likely to accelerate in China, and in fact, a moderation is possible,” Adams said in a telephone interview. “This correction also supports the same view.”

The Stoxx Europe 600 Index tumbled 2.8 percent as Rio Tinto Group, the world’s third-biggest mining company, plunged 6.4 percent on concern demand from China may weaken. BP Plc slid 1.7 percent in London, bringing its decline since an April explosion on the Deepwater Horizon rig to more than 50 percent.

The cost of insuring BP’s debt approached a record, with credit-default swaps increasing 3.5 basis points to 587.4, according to CMA DataVision, a London-based credit information provider. The contracts closed at an all-time high of 588.6 on June 25.

----With assistance from Liz Capo McCormick in New York and Bryan Keogh, Claudia Carpenter, Lukanyo Mnyanda Andrew Rummer, Michael Shanahan and Daniel Tilles in London. Editors: Michael P. Regan, Chris Nagi

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net.

EUR news (2010-06-28 EURUSD analysis)

EUR is currently moving upwards and would possibly test its last high (the previous big black candlestick). Once this resistance breaks, the next point would be at the upper line of downtrend channel which is at around 1.26.

Today Germany would announce its Consumer Price Index, which reveals the place's inflation rate. It relates greatly to the decision of whether to raise interest rate or not, hence EUR would be greatly influenced too. For news trader, it might be great time to trade EUR.

Safe Haven or Investment? (2010-06-27 Gold analysis)

June almost ends and I believe the common instrument that most people would place their most concern on would be gold. Instead of drawing cup and handle formation like many people do on the internet, I try to analyze using very simple tools, and probably have the same conclusion with many others.



I have drawn two triangles on the daily chart of Gold. The previous breakout of triangle led gold price to rally from around 930 to as high as 1226. I use fibs projection to try to figure out what the destination would be should the price breaks the triangle this time. A fair estimate would be at 1522, which would be a 300-point surge.

Since the preivous "fly" took around 4 months, due to a smaller period of triangle formation this time, I would expect the rise this time would take around 2-3 months. Perpahs it is time to invest on gold but not treat it as safe haven.

Uptrend continued (2010-06-26 Cathy Pacific Airways analysis)

This is the daily chart for Cathy Pacific Airways (0293.HK). Resistance area would be at 16.37 - 16.93. We can see that the price tested this area twice but was not able to break. The two recent trials could not even enter this area and were rejected at 16.37. But we can see that the price is still following the uptrend. As long as it does not break this trend, we could expect a breakout of the area. Once the breakout confirms, we could expect the price to rise to around 20.44.

Back to basic (2010-06-25 HSI analysis)

Hang Seng Index is more or less following what I have said in my last post about HSI. The patterns are just so similar with that for the last time and I just can't help believe the exact trend would appear again. Good luck guys.

Double Bottom (2010-06-25 ND Paper analysis)

Above is the daily chart of ND Paper (2689.HK). The stock price is now testing its support at 11.73. This seems to be a very great support which is difficult to break. The red downtrend line on the upside is converge with this support and the price would probably break upwards given the double bottom formed. Once this red resistance line breaks, we can expect 13.8 or even the previous high 14.4.

Another Breakout (2010-06-24 USDJPY analysis)

After my post about the breakout of EURGBP yesterday, it is currently testing again. The price breaks the support but we have to wait till tomorrow for confirmation. Today I would recommend another breakout.



Above is daily chart to USDJPY. The price broke the triangle few days ago and went straight downwards. Though it has already plunged quite a lot, I would predict a further drop to the support area at 88.10 - 88.54. At this area, the price should have a bit rebounce. Further drop would depend on whether USDJPY could break this area.

Possible breakout (2010-06-23 EURGBP analysis)

Above is the daily chart for EUR/GBP. Price is now testing its support at 0.8206 for the third time. If this support breaks, the next level would be at around 0.8092. Given also the triangle, the plunge would be expected to be even greater. Short positions are suitable once this support breaks. But please watch out any possible false breakout. Do not put too much money in it until the breakout is confirmed.

Possible Intraday swing trades (2010-06-23 Esprit Holdings analysis)

Hang Seng Index appeared to open low. There would be support at 20680, and possible resistances at 20764 and 20954.



Above is the daily chart for Esprit Holdings (0330.HK). The current price is 45.950 (+1.885%). We can see that in last two days it tested the resistance twice. Given a drop in global markets today, it would be quite difficult for it to attempt to break the line for the third time. But it has a very strong rising momentum at the meanwhile, it might rise up to somewhere near the resistance and let us find good position for possible swing trades intraday.

For longer term, once this line breaks, the next resistance would be at 48.60. Watch carefully.

Blog Share -- Sleep As It Relates To Effective Trading

Sleep is one of the great scientific mysteries. Although scientists understand that humans require sleep on a regular basis they do not fully comprehend why this is the case. Most adults require 7-8 hours of sleep each night in order to have optimal cognitive functioning the following day. Just as important as the “how much” is the “when” with respect to sleep.

Our bodies have a 24 hour “clock”. During this 24 cycle the body has varying levels of hormones and body temperature. Ideally, sleep begins six hours before the body reaches its temperature low point. This corresponds to around 10:00pm. You may have noticed in the past that when you retire at an early hour that you not only will awaken very early but will also feel totally refreshed. This is a result of your sleeping during “optimal” hours.

The two areas that will most likely be impacted to a trader’s detriment due to a lack of optimal sleep are focus and cognitive ability. Short term traders cannot afford to lose their focus during the day. It can very easily be the difference between a positive and negative outcome. I’m sure that most of the experienced traders who are reading this blog can vividly recall times that they missed an entry or exit because of a lapse in concentration simply due to fatigue (or maybe not so vividly).

Cognitive impairment generally slows down our reaction time as traders as we are slower to recognize patterns. These types of handicaps may cause more harm to our bottom line than trading on a slow or unstable trading platform.

Some Sleep Tips For You

1. Develop a habit of going to sleep each night at a similar time. After awhile you will begin to awake at the same time every day and this will provide you with information on exactly how much sleep you require.
2. If you are a night owl and need to drastically change your sleeping habits I would suggest taking a gradual approach of getting to bed 15-20 minutes earlier each week until you are going to sleep at the desired time.
3. Eat dinner no later than 7:00pm
4. If you are feeling hungry close to bed time try and drink some water instead of breaking out the ben and jerry’s
5. Avoid coffee or sugar close to bed time (overall not great at any time but really can interfere with sleep if consumed in the evening)

If none of the above works for you then I guess you can just start trading the Asian markets (US and Europe markets for us~)

url: http://www.smbtraining.com/blog/sleep-as-it-relates-to-effective-trading

Coal Production (2010-06-20 China Shen Hua analysis)

As I have mentioned, I would put my foucs more on Hong Kong stocks rather than international markets like forex and US stocks. Now I would try to do analysis the HSI components which are relatively safer but later I might switch to small stocks too (once I found my analysis becoming more accurate). However, the methodologies for these two categories are totally different. For big stocks with high volume, I would use more technical analysis. But for those small stocks with dollar or even cent-stock price, I would use candlestick reading instead.



So the above is daily chart for China Shen Hua (1088.HK) which is engaged in coal production and sales. It has dropped from 42 (in Jan) to 28 (in May), but we can see that the price is still well supported by the long-term uptrend line. This means that we can be optimistic to this stock as long as the support holds.

The price is now testing the resistance area of 30.8 - 31.4. The trial on Friday clearly failed and price falled back below 30.8. However, given my bullish view on HSI and global markets, Shen Hua would probably be given a great push to break this area and probably go straight to 33 which is the interception of the fibs and downtrend line. This is a major resistance and if it breaks, then just hold this stock for longer period as it might go as high 36 or even 42.

Another watch-list stock (2010-06-19 CSCL analysis)

Above is the daily chart for CSCL (2866.HK). It is currently moving upwards to test the resistance for the second time. Thing that I notice which is worth mentioning is that 50-day SMA cross 250-day SMA from above but 10-day SMA cross 20-day SMA from underneath. The former shows a bearish signal (long-term) while the later one shows a short-term bullish. If I combine this with what I have posted about HSI on 16/6 (Bearish? Bullish?), does it show evenly clearly that in next few weeks the market would surge but would eventually plunge after few weeks?

Everyone please watch carefully and don't let the gains in next few weeks blind you.

Bullish Divergence (2010-06-18 China Cosco analysis)

Today I recommend a stock with good potential, and has a relatively lower risk than other index components. It is China Cosco (1919.HK).



In the daily chart above, China Cosco shows a clear bullish divergence on MACD. This is a good reverse signal and it is further enhanced by the breakout of resistance at 8.207. The next resistance is at 8.90 - 8.99. If the price further breaks this area, we can expect the price to surge to $10. So there would be around 10% return for the first resistance area, and around 20% for maximum.

Easy Prediction (2010-06-17 AUD analysis)

Looking at the 4H chart of AUD, we can easily catch the crazy surge in the second last candle.



The price is well moving along the uptrend line, and was well resisted by the last high. AUD is now testing this resistance again at 0.8674. If this resistance breaks, the next obstacle would be at 0.8798. Get into long positions once the breakout is confirmed.

Bearish? Bullish? (2010-06-16 HSI analysis)

From different blogs and opinions from others, I found that many people expected a bearish few weeks ago. But recently they had changed their view to bullish. Personally, I am bearish for a longer run. If you ask me about my opinion on HSI in the coming month, I would instead answer: long it.



Above is daily chart for HSI. The index broke the red short-term resistance in late May and is heading upwards. However, this looks really similar to what happened in mid-2008.



After 50 SMA crossed 250 SMA from above, a 2-month bullish followed. The surge was around 6,000 points. Then, bad news revealed and HSI started dropping severely for more than 6 months, from 26377.99 to 10676.29.

It just looks so similar to what is happening now. Though the rise and fall now would not be as much as that in 2008, I would predict a similar pattern. Therefore, it is critical for investors to know when to leave the market after a certain surge in near future. Today, we can try to buy some potential stocks to wait for this rising wave. I would discover more good stocks for long positions.

Franc Bullish (2010-06-16 USDCHF analysis)

Above is the daily chart for USDCHF. After the price broke the red bullish line, it is more likely to move in the downtrend channel. A little rebound might appear due to the support of both the channel and horizontal lines, but a continuing drop seems to follow.

Resistance tested again (2010-06-15 Li & Fung analysis)

Above is the daily chart for Li & Fung (0494.HK). The price has just tested its downtrend channel resistance. Momentum is not enough today to break it. We have to keep track of it for next few days to confirm a breakout or resisted. The long red line is a long-term support for Li & Fung. As long as the price does not break this line, we can still be positive for Li & Fung.

Insurance (2010-06-14 ChinaLife analysis)

Above is the daily chart for China Life (2628.HK). The price is currently testing again the red resistance. Today the price broke upward but closed with black candle. Does it show that it has not enough power and momentum for breaking through? Though it also gets out of the downtrend channel, it has only been moving horizontally. Further great surge to break the resistance is needed to confirm bullish.

Rising Aussie (2010-06-13 AUD analysis)

Above is the 4-hour chart for Aussie. We can see that AUD is repeating its movement in late May (red lines) and is testing its resistance again. However, this time Aussie already broke its downtrend channel. It would be more likely to break the resistance this time and surge to next horizontal line, and next resistance would be at 0.8573 and 0.8692.

World Cup and Stock Market? (2010-06-12 World Cup)

World Cup started with a draw between South Africa and Mexico. I found some interesting findings on World Cup and stock market on the internet.

Research examining the link between the FTSE 100 index and England results show, on average, how on the following day the index falls after a defeat, also drops after a draw and rises if the team wins.

The study carried out by academics from the Universities of Bangor, Leeds and Newcastle examined whether, on average, returns from the FTSE 100 index changed significantly the day after 290 England international football games between 1984 and 2009.

It was found the largest gains and falls in the stock market happened after tournament games such as the World Cup.

Slightly lower share price gains and losses were noticed after friendly and qualifying matches.

The effect of international sporting results on stock markets was well documented and often attributed to the psychological effects of the result, said researchers.

Professor Robert Hudson, from Newcastle University Business School, said: ''Stockbrokers, like everyone else, can be carried away in the depression associated with an England loss at the World Cup.''

An early England exit in South Africa could have negative business effects on the alcohol, media, leisure and sportswear industries, the report added.

Dr John Ashton, from Bangor University Business School, said: ''If England are eliminated from the World Cup early, it may be a good day to look for bargains on the stock market''.

Range of Japanese Yen (2010-06-11 USDJPY analysis)

Above shows the 15-min chart for USDJPY. The price is now testing the resistance at 91.74. If it breaks, the next level would be at 91.85 to 91.93. If it holds, price would bounce back to 91.61 and the price would test the support instead. It is more likely that the price would be in this range today.

There would be more economic data released later, keep an eye on them.

Volatility in ICBC (2010-06-10 ICBC analysis)

The above chart is daily chart of ICBC (1398.HK). The price is blocked by fibs line and moving horizontally. A breakout is expected due to the convergence. A downward breakout would be more likely to happen due to my bearish view on HSI.

Child Internet Market (2010-06-09 Tencent analysis)

Today Hang Seng Index made an almost vertical bounce after lunch break. HSI closed up, but many may have noticed that one of the HSI components actually did not follow the trend but dropped severely --- 0700.HK Tencent.



After the news that Tencent would be going to develop a non-profit-oriented product on Children, which is expected to produce less profits, price of Tencent fell in the fourth consecutive trading day today.

In the daily chart of Tencent above, price has actually reached the last 137.75 resistance. Interestingly, it also hit the 250 Simple Moving Average. This would give a very large support to the price. Today should be a great time to enter long position of Tencent and we can estimate a rebound back to around 148.

If the resistance breaks, then Tencent would enter free-fall stage without large support. Then we may enter short position.

Further Proof for Great Plunge? (2010-06-08 DJI analysis)

As indicated in recent posts, I predict a great tumble of HSI to around 17000 (which is around -12%). Working on analysis on Dow Jones Industrial, I discovered that it would be almost time to prove what I have said.



DJI is actually testing its support at 9826. The downtrend channel further pushes the index downwards. If DJI breaks the red horizontal line, the next support would be at 9423, which is around -4%. However, if we link it to the HSI, DJI should not fall such little. So I might predict a further fall to 8290 instead.

1st G-7 Country this year (2010-06-07 USDCAD analysis)

Canada is the first G-7 country to raise interest rate. As we can see, USDCAD rallied in the last few days meaning a plunge in CAD. Given the crisis warning in Hungary which led to panic tumble in most currencies against USD, CAD, however, might be able stand still and surged.



As we can see in the chart, USDCAD appears to be topping as blocked by the downtrend channel. It would be more likely to fall.

Similarity? (2010-06-06 HSI analysis)

Bearish view continued. The 250 Simple Moving average has crossed the 50 SMA from underneath. As we can see, when they crossed like this last time, HSI dropped from 20545 to 11050. I would not predict such a great plunge this time as there is no any "crisis" which is as serious as the financial tsunami.



The next support would be at around 17671. Further stumble might follow. Given such similar condition, shorting HSI would be a great choice.

Free Fall again (2010-06-05 EUR analysis)

With a surge of 14 basis point in Hungary's CDS, EUR broke its low of 1.20. This indicates that 1.20 could no longer give large support to EUR and it would even slide further.



Though it might look too pessimistic, I would predict the next stop at around 1.14.

China Construction Bank (2010-06-04 0939.HK analysis)

Hang Seng Index closed down a little today. The somehow horizontal moves these days show an unclear view on the future movements of the global markets. Any pieces of breaking news would lead to a large fluctuation. Below is the daily chart for CCB (0939.HK).



I have drawn two trend-lines, one longer (red) and one shorter (green). They give different interpretations. Also, Stochastic and MACD show different signals too.

However, combining all these indicators, I would predict a slow drop in price of CCB following the green line and might eventually break it. Although in MACD, the two lines cross, they did not cross at low levels, but at around 0. This weakens the bullish signal given by MACD. Both lines in stochastic is heading downwards. This signals a further drop later.

CCB price might rise a bit to the red line. That would be a good place to sell.

Too much attention? (2010-06-03 Gold analysis)

I heard some people saying that gold was gaining too much attention which gave a hard block for its great rally. After working on some analysis, I would predict a great rise these few weeks instead.



We can see that Gold broke its last high but not being able to stay above and slided down after touching the fibs line. It is now testing that horizontal line again. It is more likely for it to be able to outbreak and rocket due to the pressure by the blue uptrend line. The red long-term line and fibs would give us hints about where it would reach this time, which is about 1324. Bullish is still not over.

HSBC (2010-06-02 0005.HK analysis)

Seeing such a great plunge in the markets, one of my friends would like to place a bet on HSBC. My suggestion would be: it is still not the time yet.



HSBC was supported after dropping to 9-month low few days ago. We can see that MACD lines cross, which might indicate a reverse of trend. However, RSI is still above 50. It shows that HSBC is not as oversold as we thought. The MACD cross might provide evidence for a little rebound. However, the trend is still pointing downwards. A better price to place the bet would be at around 61.

No change for interest rate in Australia (2010-06-01 AUD analysis)

Australia decided not to change its interest rate, which matched the expectations from the public. Below is the 4-H chart for Aussie.



There is a great support area between the interception of green and red trendlines and the horizontal line. We would expect a rebound in technical terms. Breakthrough of this area would lead to the support at 0.8276 and 0.8190.

Later Canada would be having a meeting on monetary policy. Market expects an increase in interest rate due to the good economic conditions (increase of 1.5% in Q1 GDP). This might lead to fluctuations for CAD. Keep an eye on CAD.