Hang Seng Index (HSI) Weekly Overview (11/01/2008)
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This was tought week for Hang Seng. While SSEC rallyed HSI stayed mixed all the week. I see clear channel with strong resistance and support. Recently China took steps Wednesday to freeze regulated prices of energy and other utilities, in a bid to combat inflation exacerbated by soaring global crude oil prices (Read full article at MarketWatch.com). This made energy stock to decline. On friday Asian markets ended sharply lower as a news report on additional write-downs by Merrill Lynch reignited fears related to subprime mortgages.
Technical indicators
Dynamic Support & Resistance Levels
Look at the EMA 50 and EMA 100 lines. Noticed how every correction bounced off EMA 100? And this week EMA 50 was the resistance and EMA 100 was support level. While market is in standby mode price formed tight channel and next week will show were we gonna go.
Technical patterns
Many traders noticed forming descending triangle that by it’s nature is bearish sign. Breakout to any direction would indicate buy or short signal.
Other
MACD indicator is flat - market is consolidating. RSI most of time stays in little oversold area.
Indices Internals
As you can see in the bar chart* above - in medium term bears are taking control. A little more than a half (55.81%) stocks included into Hang Seng Indice have confirmed any direction. 23.26% stocks are in solid uptrends, 32.56% are downtrending and 44.19% have not confirmed any direction yet.
* - Source: Private Stocks Research Group.
Elliott Wave Analysis
Short term: Correction, but could end next week
Long term: Bullish
Corrections are the most difficult to count, but this one looks like triangle with a-b-c-d waves completed and wave iv is under it’s way. I expect it to finish next week. If index breaks 26000 level I will post alternative count (at the moment this actual count looks more reasonable to me). Let’s wait few days more to see how thing turns out.
Have a nice weekend!