Testing support (2010-12-17 China Mobile analysis)

HSI dropped 306 points to 22,668 yesterday. It broke the neckline on daily chart, so the next support would be at around 22,500 on weekly chart. This is the last defence line, if it breaks as well, a big bearish wave will be following.

China Mobile (0941.HK) faces a strong difficulty as well.



Above is the daily chart of China Mobile. It has reached the lowest point in the last six months. The red down-trend line further provides holding as well. This level is a strongly supportive.

However, there was a bearish cross of the moving averages (10SMA x 20SMA) few days ago. This was a bad sign. MACD has no sign of reversal as well.

If this level breaks, the next level will be at 71.3. You can consider short the stock or buy its put warrant (but make sure you choose a suitable one with good volatility and time sensitivity). Nonetheless, China Mobile is the second most important components in HSI and it follows the movements of HSI tightly. We should check both charts before making decisions on 0941.HK.