Hang Seng Update
Macro Picture
Chinese economic data continues to come in stagnant. So far, I dont see anything major within the data recently that looks dovish for Chinese markets. Sometimes, the stock market will defy the economic data, but at the moment, the Hang Seng Index looks stagnant, just like the economic data.
It seems like everybody is waiting for a big stimulus announcement before the market can go bullish again. The last major stimulus package sent chinese markets into a 50% rally.
The chinese real estate market is in a slump, and corporate profits dont look great. But with a quick look at all other aspects of the economic data, it doesn't look like the economy is weak enough to warrant a big stimulus like everybody is waiting for. I am not a professional economist. This is just my opinion.
If anybody has any other insight into the chinese economy, like whether things are improving or declining, then please let me know in the comments section. I always appreciate any additional insight.
Technical Picture
Looking at the very long-term picture, the Hang Seng Index is breaking down below a major trending support level.
The price action has climbed back up to retest this support level. So far, the Hang Seng rejected this support level that has now become resistance.
Lower lows have still not been reached on the monthly candles. This means the very long-term trend is still upwards. So, technically speaking, as a very long-term investment, things still look good. But in the shorter timeframes, things look a little bit trickier.
The trend over the past two and a half years has been a strong downtrend, like you can see in the chart below. Until the index can climb above the bear market resistance level, then technically, it is still in a bear market.
When you look at the short-term trend, like in the chart below, you can see the current trend highlighted by the blue lines.
The price appears to be adhering to support and resistance levels within this price channel. This is the trend to watch at the moment. Right now, the price is right in the middle of the trend. Any deviations from this current trend will likely catch swing traders' attention, and there could possibly be significant price movement when the trend is broken.
I want to point out the failed price channel that I have highlighted by the pink lines. I was recently watching this as the next possible uptrend. But the channel was not confirmed as the price had dropped below support.
Currently, the price action has climbed back up to the support level of this failed price channel. This failed support level is now a resistance level to watch. It is a short-term and weaker resistance level, but a resistance level none the less.
If you zoom in to the 1-hour candles, you can see that the immediate-term trend is downward but rebounding off of the support level of the current trend. If the current trend persists, then the price action should climb back up to resistance of the current trend.
The only resistance in the way of that climb would be the failed support level I mentioned and the horizontal resistance level that I have highlighted in the chart directly below.
I have highlighted the support/resistance levels to watch for possible entries and exits into any swing trades. I have also circled the stronger support levels. Since the trend is down, these are the areas that I would watch for a potentian rebound in price action.
Whether that be a short-term bounce or a larger rebound, I couldn't tell you. But these are the areas where I will watch for buyers or sellers to come in and move the price.
If I see action happening at these levels, then I might make a trade decision based on the price action.
Conclusion
The macroeconomic outlook is not looking the best. It is not complete doom and gloom, but the economic data could be a little more accommodative for the chinese stock market before I would want to go all in.
With that being said, as a long-term investment, I think that one of the worlds biggest economies is a great investment if you pick the right areas to invest in. The road might be rough in the near future, but economic data can't stay weak forever.
The long-term technical picture looks good so far. The shorter-term outlook is a bit scarier. After the 50% rally, spurred by a large stimulus package, the Hang Seng has been stagnant.
Personally, I would feel more bullish if the Hand Seng breaks out above the current price channel I mentioned. I would feel even more bullish if the price gets above the bear market resistance. After that, I need to see 52-highs, and then we have an official uptrend.
As for right now, things dont look very bullish yet, and my gut feeling says there might be more downside in the near term.
When will the next rally happen in chinese markets?
As always, this is not investment advice. Good luck trading. Be careful and be patient. Dont anticipate the market. Rather, participate in the market. Give your investments time. Don't be greedy. Don't invest in anything you don't understand. Don't put all of your eggs in one basket. Don't listen to the hype. Don't fomo or panic into or out of trades. Do your own due diligence. And just follow the trends. A trend is your friend.
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$Direxion Daily CSI China Internet Index Bull 2x Shares ETF(CWEB.US$ $China Alphadex First Trust(FCA.US$ $Wisdomtree China Ex-State-Owned Enterprises Fund(CXSE.US$ $S&P Asia 50 Index Ishares(AIA.US$ $KRANESHARES SSE STAR MARKET 50 INDEX ETF(KSTR.US$ $RAYLIANT QUANTAMENTAL CHINA EQUITY ETF(RAYC.US$ $iShares China Large-Cap ETF(FXI.US$ $Xtrackers Harvest CSI 300 China A-Shares ETF(ASHR.US$ $Franklin Templeton Etf Tr Ftse China Etf(FLCH.US$ $db X-trackers Harvest CSI 500 China A-Shares Small Cap Fund(ASHS.US$ $iShares MSCI China ETF(MCHI.US$ $KraneShares CSI China Internet ETF(KWEB.US$ $KRANESHARES CICC CHINA 5G AND SEMICONDUCTOR INDEX ETF(KFVG.US$ $Global X Funds Global X Msci China Consumer Staples Etf(CHIS.US$ $Global X FinTech Thematic ETF(FINX.US$ $Global X Fds Msci China Industrials Etf(CHII.US$ $Global X Fds Msci China Energy Etf(CHIE.US$
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SpyderCallOP : @102640653
The Hang Seng will bounce eventually. When and where that happens, I'm not too sure at the moment.
The index is still well above 52-week lows, which looks good. But it really needs to rebound soon to stay above the short-term fibonacci levels.
Risky Investor : The next rally is here! Trip.com will blow it out of the water to further fuel the rally.
SpyderCallOP Risky Investor: a lot of people have been hyping up TCOM lately. Is there something that I missed? Why is TCOM getting so much attention??
Risky Investor SpyderCallOP: Nothing big, just that the earnings of Chinese tech companies have been very strong and the market has oversold and is due for a correction. We can't look at China in an oversimplified lense. The China economy is exhibiting a big divergence between general manufacturing and export vs. tech and services and EV. The general manufactoring may be gloomy, but assuming the same for global tech companies like Bidu and Alibaba... is too generalized.
SpyderCallOP Risky Investor: The Hang Seng tech index is performing much better than $Hang Seng Index (800000.HK)$
SpyderCallOP Risky Investor: I agree with what you are saying. I think technology is always the best sector to be invested in. In the US, China, and Europe.
razo2 : if I were to bet. China can QE anytime since they technically gone through a near 4 year recession during the lockdown. but they are not interested to buy US bonds, nor pay out QE to bail out failing real estate companies, banks and US government bonds. they will keep the QE limited until the war between Ukraine and Russia had ended with peace.
SpyderCallOP razo2: That is a good way to handle the situation, in my opinion. I was never a fan of bailouts. The effects from stimulus will likely be somewhat muted when the geopolitical situation is as bad as it is currently.