Hang Seng Index (HSI) Facing Downtrend Pressure

Hang Seng Index (HSI) Facing Downtrend Pressure

What are we expecting?
Hang Seng Index (HSI) fell below its key support level at 28,000. This break is more significant than usual as HSI has just experience index being halted at 31,000 level, and mounting Supply as indicated by our proprietary FFI (Fund Flow Index) indicator.

These actions suggest the index is in a Distribution Phase, entering Mark Down phase.

First level of support for HSI will be at 26,000 area cushioned by high volume area and 1.618% Fibonacci level.

Who should be concerned?
Investors: Investing in the Hong Kong Market may reduce position at this point but also keep a lookout for stocks that show signs of bottoming during the Mark Down process.

Traders: Taking short positions is preferred till 26,000 target reach or character of accumulation phase is observed.

Why the Mark Down?
Stock market is always forward priced, we will not be able to clearly define the reason till 3-6months later. One marco trend that is developing is expectation of inflation, which leads to hike in interest rate environment, threatening companies recovering from the COVID-19 pandemic.

*Disclaimers apply

Wyckoff's Law of Effort

Law of Effort Wyckoff's Law of Effort states that on any single trading day (or week depending on time frame), huge volume (effort) push by participants should see huge price movement, resulting in a wide spread (long body). This is a basic principle of effort and result. However, as per Singtel's case study, we saw huge selling volume on 11 May, yet the price action only shows a narrow spread (small body). This divergence of effort and result in Wyckoff's Law of Effort principles, indicates possible exhaustion in selling or hidden buying. Thus, with a lack of weakness, Singtel should continue trading range bound for the coming days or weeks till further strength or weakness is observed. Swing Traders who trades range can consider positions at 3.70-3.72, with exit target 3.76-3.78.

Markets searching for technical support

Thoughts on Week Ahead: Week 21 Aug 2023 Markets searching for technical support US FOMC minutes have confirmed market’s fear of a hawkish US FED. This fear has triggered a continued sell-off in global equities over the past week. China economy and policy did not help too much either. China Evergrande filed for chapter 11 in US while Country Garden future remain uncertain as investors continue to keep an eye for a more aggressive policy from Beijing to support the economy and people’s confidence. From a technical perspective, markets are searching for technical support levels, where bargain hunters are willing to come in. Support levels are 4,300 for S&P 500 and 3,130 for STI. For the week ahead, market participants will be zooming in on US FED Chair Powell’s speech at the Jackson Hole meeting. We did not uncover trading (tactical) set up for the week ahead and will update once we identify any. Have a great trading week ahead. Headlines for Week Ahead: Key corp earnings (Nvidia

Thoughts on Week Ahead: Week 28 Aug 2023 Looking out for technical reversal indication Past week was an eventful one, with significant developments ranging from the arrest of former US President Donald Trump to BRICS expanding its membership to include financial powerhouses Saudi Arabia and the UAE. However, the focal point for the financial markets remained the speech by the US Federal Reserve Chair at Jackson Hole. The Chair highlighted that current economic condition is more favorable and hinted at holding rates during the Sept FOMC meeting, but also suggested a possible 25 basis points hike later in 2023, aligning with market expectations. Personal view, mixed rate outlook could suggest potential interest rate pivot (peak). Currently, both the S&P 500 and Hang Seng Index are in the process of establishing support levels at 4,300 and 17,800, respectively. We are closely monitoring these markets for signs of supply exhaustion, which would indicate a potential reversal. Intuit

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