Two good news for the index (2010-12-20 HSI analysis)

There were two good news for Hang Seng Index last week:
1. On daily chart, the index managed to stay above the neckline. The situation wasn't that bad;
2. On weekly chart, HSI did not break the up-trend line, which was a support to the index.

Daily chart of HSI:


Basically, the head and two shoulders have formed. The next concern is whether HSI will drop below the neckline. If so, according to the pattern estimation, it will drop till around 20,500, which is around 8% plunge.

Good news is that last week the index once broke the neckline from above, but finally it managed to regain and closed above the neckline, at around 22700. The formation of head-and-shoulder pattern has not yet completed. At least we don't have to be afraid of the plunge of 8%.

Weekly chart of HSI:


Same as that last week, the green line is the up-trend support line. This provides great power to help maintain the index at current level and prevent it from falling below. It somehow protects HSI from forming the head-and-shoulder pattern.

Though HSI experienced slumps last week, the lovely green line helps set the rebounce of the index and finally the index closed above it. However, MACD and EMA are not looking too good. Volume retreated as well due to the uncertainties on Europe financial status.

If this line breaks, it also implies the successful formation of head-and-shoulder on daily chart. Then it is definitely a bad sign...

A further step towards Head-and-Shoulder formation (2010-12-13 HSI analysis)

Last week was a quiet week, nothing important happened. HSI opened at 23,507 on Monday and closed at 23,162 on Friday. However, the index is in progress of forming head-and-shoulder pattern.
Daily chart of HSI:


We can see that the third peak has formed. The red neckline would be the next support level, which is at around 22,750. It would be a very critical level. As suggested by the head-and-shoulder pattern, if the index breaks the supporting neckline, it would drop as much as the distance between the neckline and the highest peak; hence, HSI could drop to as low as around 20,600 estimated by the pattern.

It would mean a 10% drop in index which is definitely very serious. Though MACD has been falling, it is still around zero now. This would not be a vital power supporting the index.

Weekly chart of HSI:


The index has moved a step towards the red uptrend line. This line is a support, which tells us that there might be a support at around 22,500. The shrinking volume and bearish cross of MACD and EMA give bad signals about HSI.

Combining both charts, if the index this week drops through 22,700, we don't have to make decision on whether to sell everything or short-sell stocks too quickly, as there will be a support at 22,500. It is possible for the index to have false breakdown. If the index drops below 22,500 at close of this week, then it would be a really really bad signal. We can then decide how to make profits on the coming bearish waves.

Head-and-Shoulder (2010-12-06 HSI analysis)

As usual, let's have a bit update on Hang Seng Index and see how it would go this week.

Daily chart of HSI:


Though I had made wrong predictions last week, I found that the index is forming a bad pattern: Head and Shoulder.

After the two peaks before, with the former peak at lower level, the index currently reached the level of the first peak. Apparently, it was resisted and could not break that level last week. The two black candles could definitely show it.

22,500 would be a critical support level as it is the "neck line" of the pattern. If the index breaks it, the pattern is formed and we can expect a plunge in the index.

Good news is MACD and EMA just had a bullish cross and would probably give some confidence to investors. If HSI is not moving downwards, the next resistance level will be at around 23750, which is the level of the second-previous peak.

However, weekly chart suggests bearish.

Weekly chart of HSI:


The green line is the support up-trend line. Interestingly, the support level now is around 22,500, which is exactly the support level of the head-and-shoulder pattern in daily chart. Breaking this level would mean so bad in both charts.

MACD and EMA in weekly chart had a bearish cross. It might somehow signal a long-term bearish, and probably have a bit consolidation in short-term suggested by daily chart. Therefore, next week is still an unknown week. There will not be many economic data which can greatly affect the market, so the flucatuation should be smaller.

Good luck.

Uncertain (2010-11-29 HSI analysis)

From around 23,500 at the beginning of last week, Hang Seng Index has dropped around 600 points and closed at 22,877. Both the conflicts between N.Korea and S.Korea and the debt crisis in Ireland (actually PIIGS before any concrete figures showing improvement in their financial status) helped set the market downwards.

Would HSI keep on dropping in the following week? It depends on whether it could stay above the support which is around 100-200 points from the current level.

Daily chart of HSI:


After the index broke its supportive uptrend line at around 23,600 last week, it plunged and reached the next support level.

Currently it is at around the support the zone, with support given by both the longer-term uptrend line and the fibonacci 50% level.

MACD dropped below 0, which would greatly reduce its momentum to keep on slumping.

Weekly chart of HSI:


For this longer timeframe, a bearish cross by MACD and its EMA just appeared, signalling a bearish market would follow.

On this chart, the green support line would be at the level of around 22,400. Again, the fibs 100% level by using projection on the wedge and the uptrend line provides the power to support the index.

It's hard to predict what would happen next week. Probably it would keep on falling to the support zone, and would have a bit consolidation. If the support breaks and the index drops below 22,400, we can have a even more bearish view. If not, it is quite risky to make any decisions for both long/short.

Breakdown of HSI? (2010-11-22 HSI analysis)

After big drops in the beginning of last week, and some rebounces on Thursday and Friday, concerns on Ireland crisis had somehow eased. There was a rescue program offered by EU to Ireland which might be a good news to investors and the stock markets.

So let's have a bit forecast on next week's Hang Seng Index.

Daily Chart:


In this chart, HSI broke the red uptrend support on last Wednesday, and could not manage to get back above it. The 61.8%-fibonacci level somehow gave support to the index, but it could do nothing to avoid the breakdown.

MACD and its EMA dropped to level around 0, and MACD was getting flatter. There is a potential bullish signal.

So now what? Breakdown with potential MACD bullish cross?

Wait, let's check the weekly chart. It might give better hints.



The red line is a bit adjested in the weekly chart. We can see the index closed below the support line last week, but still it could be false breakdown.

Apart from the red line, we could hardly see a support until 22685, which is around 1,000 points below currently level. MACD and EMA had a clear bearish cross in weekly chart.

Combining both chart, I expect the index to further drop this week, breaking the support line in weekly chart. 22685 would be the first support.

Critical Moment (2010-11-17 SSEC analysis)

Above is the daily chart of Shanghai Stock Exchange Composite Index (SSEC). After big drops in these few days, the index reached a support level. This level is given by the downtrend line the index has been following since October 2009, and broke in September 2010. It changed from resistant to support.

Another support is given by the fibonacci retracement, using the high in Q3 2009 and the low in Q3 2010. SSEC reaches the 50% of the retracement and there is supportive power to the index.

Now it is a critical moment to decide whether the bullish market ends or the drop is only corrections, followed by another bull wave. If SSEC plunges and breaks the downtrend line and fibonnaci level, we can expect it to slump to as low as 2,700. Level of 3,000 would be the upside resistant given by psychological power as well as 61.8%-fibonacci level.

China Market (2010-11-12 SSEC analysis)

HSI has been moving down and up and down this week. It is more or less the consolidation I mentioned on Monday. Instead of looking at it again, why not do analysis on the market that would affect HSI quite a lot.



Above is the daily chart of Shanghai Stock Exchange Composite Index (SSEC). The index broke the very long-term downtrend line (in red) in late Sept 2010, and it is definitely in bull market currently.

However, by using fibonacci projection on the green pennant, it has reached the 161.8% level and is facing resistant. The index is struggling to break this level, but it seems there is big selling so it could hardly break it.

MACD and EMA are whip-sawing so we could hardly tell what would happen next. However, the chance for dropping would be higher given MACD is at such high level.

2,950 would be the support, given by both the 100% fibs-level and the long-term red downtrend line.

3,481 was the high in 2009 and it would definitely be a big resistant for SSEC.

HSI Update (2010-11-08 HSI analysis)

Let's do some update on Hang Seng Index. As we can see from the daily chart above, 61.8% fibs level broke last week and next resistance level is at 26,400. Whether it would immediately reach there or not can be predicted by the other indicators.

MACD is moving towards its last high and would face a big resistant at that level. This certainly curbs the power of the bull wave of the index. Due to the sudden boost these few days, HSI broke the Bollinger Upper Band and is currently quite far away from the band.

On last Friday, there was a sell-off in the market, but the index was then pushed back up and closed near the open. This was a typical "hanging man" pattern, which signals a lower momentum of the bull. It is usually accompanied by plunges afterwards, so we can wait 2-3 days for confirmation.

Nevertheless, the bull is not that strong currently, so it is not a good time to buy any stocks right now. There should be corrections these few days.

Breakout (2010-11-05 Dow Jones Industrial Average Index analysis)

Global stock markets rallied after Fed's announcement for $600billion bond purchases. This Quantitative Easing helped push the stock markets, gold and silver, and USD was trading lower. Thanks to it, Aussie recorded new high of 1.1075. All the other currencies are surging crazily.

Let's focus on the stock markets.



Above is the daily chart of Dow Jones Industrial Average index. After rising along the green channel for two months, the index just broke the channel and was moving higher. It also broke the 61.8%-fibs level which once stopped the index once in April 2010.

If the breakout confirms, which means it could stay above the green channel for 1-2 more days, then next resistant level would be at 11788, which is around 3.1% from now. However, MACD is quite high; therefore, momentum is relatively lower and the index might walk sideways for several days before giving us further signals.

Uncertain (2010-11-01 HSI analysis)

Start of November, good luck this month everyone. Time difference between Hong Kong and London changed from 7 hours to 8 hours yesterday due to the winter time, which means I would have to get up even earlier to keep track of the Hong Kong market.

Anyway, let's predict how HSI would move this week:


Above is the weekly chart of HSI. After touching the 61.8% fibs level three weeks ago, it dropped and could not break it. The index is currently still within the pitchfork, and above the red triangle which it broke before. One thing to be aware of is the MACD and its EMA. They have touching each other, so there will be possibility for a bearish cross unless HSI could surge in this week.

Neither the trendlines nor the levels can tell us about its movements this week, so we'd better do nothing. If it breaks the 61.8% fibs level (23,800), next resistant would be at 26,400. If it plunges instead, there will be support at 21,000 - 22,000 given by the pitchfork and the red trendline.

China market (2010-10-28 SSEC analysis)

The sudden slump in HSI was really unpredictable. We might say that it might be due to QE2 by US, but it doesn't need a reason for big jumps or falls anyway. Nevertheless, it was China market which led the HSI upwards, and yesterday it was again China market which pulled HSI down. So I did analysis on the chart of Shanghai Stock Exchange Composite Index (SSEC).



Above is the daily chart of SSEC, we could clearly found the rapid and crazy surge in Early October with an increased trading volume. In these few days, the index was moving in a narrow uptrend channel. Although it plunged greatly yesterday, the index managed to close above the 10-day SMA and within the channel. The condition does not look too bad, at least until this moment.

If SSEC could go back upwards, the resistance level is at around 3100, and then 3200 which is the peak level in April 2010.

If SSEC breaks down, then it would be a nightmare as there is no support level until 2700. So keep track of SSEC rather than focusing on the Hong Kong market.

What's it up to? (2010-10-27 HSI analysis)

Above chart is the daily chart of Hang Seng Index (HSI). After more-than-1-month surge along the green channel, it has been moving sideways these few days. MACD has been dropping after the bearish cross which is not a good signal, and the index touched the bottom line of the channel today. Upper bollinger band is getting flatter, showing a sideway market.

I would expect slight movements these three days, and the GDP announcement by US on Friday would be a trigger point for larger volatility next week. News traders could probably buy HSI call on Friday as the GDP is expected to have increase in growth.

Correction (2010-10-18 HSI analysis)

Hang Seng Index was up around 600 points last week. It was a good week for everyone. After DJIA broke the resistant, it dropped back into the uptrend channel. It looks like a corrections would be arriving soon.

Daily Chart:

What daily chart shows is nothing but resistant. The index is currently facing strong obstacle, which is the combination of long-term fibs level and short-term pitchfork. MACD has reached a pretty high level, though it is still moving upwards, the power seems much weaker. It is more likely for consolidations or corrections.

Weekly chart:

Weekly chart gives little hope to us. 20-day SMA just touched 50-day SMA from below. A cross would be even better, but there is still a chance that the index falls and the 20-day SMA drops as well. Then it would become a failed bullish cross formation.

Hang Seng Index is more likely to be under consolidation or correction in the coming week, led by that of Dow Jones Industrial Averages! Be careful everyone!

Not looking good (2010-10-13 DJI analysis)

The daily chart of Dow Jones Industrial Average is not looking so well.

Firstly, the index reached the upper line of the uptrend channel, and there would be a short-term correction followed.

Secondly, MACD just showed a bearish cross at high level, which is a strong indicator telling us that the index no longer has momentum to continue its surge.

Thirdly, by using fibs projection, DJIA just rised as much as the boost last time. It is time for corrections.

Slump in volume further enhances my view. In short-term, the index would plunge. First support is at 10720, which is the last peak. If using fibs projection, it could slump till as low as 10300. Good luck!

Surge followed by Correction (2010-10-03 HSI analysis)

A new month starts. Traditionally September was not a good month for stock markets, but it wasn't the case for the previous month. Hang Seng Index broke the long-term downtrend line and kept rising. Let's see the daily chart below.



Currently, HSI is following the narrow green wedge. Obviously, the bullish momentum is really great, with the rising of MACD and EMA and the volume. It reaches the previous high in April, and I expect it to break it and reach the next fibs level at 22913. The high level of MACD and EMA is a big concern which might stop the index from rising.

I would anticipate a further rise in the few days, but when those economic data which affects the stock markets starts to pop out, a correction would occur.

One bad news and One good news (2010-09-27 S&P500 Index analysis)

A new week starts again. Good luck everyone on your trading, hope you have taken good rest in the weekend to prepare for the coming high-volatility week. There will be many important economic data which are going to affect the stock markets a lot. My view on S&P500 index is quite bullish for longer term, but in there might be some corrections in shorter-term.

Daily chart of S&P500 index:

The index made its way through the red triangle, and there is no resistance at all till 1172. However, we have to be aware of the MACD and EMA. They are both in a very high level, which almost reaches the highest level in early 2010. It might mean that the bull power might not be able to keep pushing the index upwards. Correction will probably follow.

Weekly Chart of S&P500 Index:

However, looking at the weekly chart, I would recommend everyone to buy stocks. The index broke the red triangle (which is actually that one in daily chart), and it is even clear that the next resistance would be at 1221, rather than 1172 suggested in daily chart. MACD and EMA are at level around 0, so it could probably keep going upwards.

By concluding both, in the next week there might be little corrections, we can seize the opportunity to buy stocks. Then, we can just stay and wait.

Good time for buying (2010-09-22 HSI analysis)

It is 2am here in London and I am trying to catch up with the Hong Kong market.

Weekly chart of HSI:

The breakout should be confirmed, but there is still not yet a big and rapid surge. Instead, the volatility is really low these 2 days. Hopefully the first stop would be at 23,000.

Daily chart of HSI:

Daily chart tells us more this time. Clearly the index broke the red downtrend line, but we need 2-3 days to confirm it. The next stop will be at around 23,000. MACD and EMA are at high levels, showing that low volatility may happen before continuing to surge up to 23,000. It might be good time for us to buy some stocks.

Annoying Network in Lonodn

The wireless in the University and my residence really makes me angry! I could not get access to the internet in my room and the wireless often disconnects in the University!

Sorry I could only start posting my analysis when everything settles down...

HSI rose 6.48 points today to 21977.34. As I could not get onto my charting software due to the unstable network, I would try to use some of my imagination. The index breaks the triangle on weekly chart, but today shows that people are also taking profits as they might believe there would be corrections afterwards. However, my view is quite optimistic. Having no big drop today shows that the power of full is still strong enough, as normal people would choose to sell at this point rather than having the courage to buy. It is the new 5-month high anyway.

I will keep an eye on both ICBC and 0716.HK. Hopefully the network would be fine few days later...

Breakout of HSI? (2010-09-17)

Weekly chart of HSI:

HSI finally broke the triangle on weekly chart and closed at 21,970 yesterday. If this breakout is confirmed by 1-2 more trading days above the triangle, then it should be a great time for us to buy stocks and wait for shorter-term investment. I will post more stocks with high potential to surge.

Daily Chart of 0716.HK Singamas Cont:

I would like to talk about 0716.HK. The price is getting higher and trying to test the previous high. The next big resistance is at the last high, once this breaks, the rise would be pretty great. Let's keep an eye on it

Betting on pullback? (2010-09-15 HSI analysis)

Above is the weekly chart of HSI. After trying to break the triangle, the index was clearly resisted by traders betting on pullback. Well we still can't tell what will happen afterwards.