(Bloomberg) -- China’s stocks rally may have reached an “exhaustion point” after the benchmark index last week rose to a 13-month high, DMG & Partners Securities Pte said. The Shanghai Composite Index climbed to 3,221.07 on July 16, which was the highest since June 2008. Further advances may be unsustainable as the measure nears resistance in the upper Bollinger band and the 161.8 percent Fibonacci extension of an earlier wave of gains, to between 3,231 and 3,245, DMG’s Singapore-based analyst James Lim said in a report today.The government’s 4 trillion yuan ($585 billion) stimulus package and record bank lending have helped the Shanghai Composite Index soar 75 percent this year, making China the world’s best-performing major market. Gains last week helped China briefly overtake Japan as the world’s second-largest stock market by value for the first time in 18 months.
“Given the steep climb and increment, we now believe that the current Wave 3 may have already reached exhaustion point,” Lim wrote. “The risks are clearly against those who are looking to buy into the market at present levels.”Bollinger bands, a technique developed by analyst John Bollinger in the 1980s, use historical volatility to set upper and lower targets either side of the moving average price of a commodity, currency or security. Fibonacci analysis uses ratios, which are based on the sequence identified by an Italian mathematician in the 13th century, to predict support and resistance levels for prices.The index may find support at around 3,076 and 3,088, representing a decline of as much as 3.6 percent from last week’s close, the analyst said. Support may be available between 3,011 and 3,015 should the index fall further, he added.
The Shanghai Composite’s 14-day relative strength index, measuring how rapidly prices have advanced during the specified time period, rose to 77.4 at 10:11 a.m., according to Bloomberg data. The RSI has been above 70, a level that some investors view as a signal that the gauge is poised to fall, since July 14.
Tuesday, July 21, 2009
Europe Stocks May Extend Gain on ‘Upside Breakout’: Technical Analysis
(Bloomberg) -- Futures on Germany’s DAX Index and the U.K.’s FTSE 100, which last week posted their biggest weekly rally since at least April, may break through resistance levels for further gains, according to Lloyds TSB Corporate Markets.
DAX futures, an indication of future movements in Germany’s benchmark index for equities, may climb as much as 10 percent to 5,500 from their July 17 close at 4,988, said Paul Rodriguez, a technical analyst at Lloyds in Londoon.“Upside breakout is close for core equities as risk appetite increases,” Rodriguez wrote in a report today. “DAX index futures should make an attempt to break a strong resistance level at 5,178.” The analyst sees the equivalent resistance for FTSE 100 futures at 4,471, compared with the close at 4,362 on July 17.
Stocks worldwide rallied last week as U.S. companies from Goldman Sachs Group Inc. to Johnson & Johnson reported earnings that beat analysts’ estimates, adding to signs the first global recession since World War II is easing.DAX futures expiring in September climbed 1 percent to 5,036 as of 4:27 p.m. in Frankfurt, while futures on the FTSE 100 expiring in the same month added 1 percent to 4,405.5.Technical analysts look at price charts to forecast resistance levels, or ceilings restricting further price increases, and support levels, or floors limiting declines. A breakout above the resistance level is considered a sign for further gains.
DAX futures, an indication of future movements in Germany’s benchmark index for equities, may climb as much as 10 percent to 5,500 from their July 17 close at 4,988, said Paul Rodriguez, a technical analyst at Lloyds in Londoon.“Upside breakout is close for core equities as risk appetite increases,” Rodriguez wrote in a report today. “DAX index futures should make an attempt to break a strong resistance level at 5,178.” The analyst sees the equivalent resistance for FTSE 100 futures at 4,471, compared with the close at 4,362 on July 17.
Stocks worldwide rallied last week as U.S. companies from Goldman Sachs Group Inc. to Johnson & Johnson reported earnings that beat analysts’ estimates, adding to signs the first global recession since World War II is easing.DAX futures expiring in September climbed 1 percent to 5,036 as of 4:27 p.m. in Frankfurt, while futures on the FTSE 100 expiring in the same month added 1 percent to 4,405.5.Technical analysts look at price charts to forecast resistance levels, or ceilings restricting further price increases, and support levels, or floors limiting declines. A breakout above the resistance level is considered a sign for further gains.
Hong Kong’s Stock Market Rally ‘Overdone’: Technical Analysis
(Bloomberg) -- Hong Kong’s 5-day stock rally will falter because enthusiasm that drove the key index past the so- called resistance level of 19,000 has been “overdone,” UOB-Kay Hian Ltd. said. The Hang Seng Index climbed 3.7 percent to 19,502.37 yesterday, its highest close since Sept. 22. It’s the first time the gauge has closed above 19,000 this year, having fallen short of that level twice.“Institutional investors are very cautious at this level. The Hang Seng can’t stand firm above 19,000,” said Steven Leung, a Hong Kong-based director of institutional sales at UOB-Kay Hian. “The rally is overdone, and there are concerns over banks and property. The risk is that China may make use of comments to talk down the market.”
The index has rallied 72 percent from a more than four- month low on March 9 amid speculation stimulus efforts worldwide, including 4 trillion yuan ($586 billion) of spending in China, will revive global growth. The gains from the March low have outpaced the MSCI Asia Pacific Index’s 48 percent rally in the same period. The broader Hang Seng Composite Index is up 67 percent in that time.The Hang Seng Index’s 14-day relative strength index, measuring how rapidly prices have advanced in that period, was at 68 yesterday, according to Bloomberg data. That’s close to the threshold of 70, a level that some investors view as a signal the gauge is poised to fall.“Institutions are very quiet at this point. They want to buy, but the market has run ahead too quickly,” Leung said. “They’re waiting for the market to pull back to around 17,000 to start buying again.”
The index has rallied 72 percent from a more than four- month low on March 9 amid speculation stimulus efforts worldwide, including 4 trillion yuan ($586 billion) of spending in China, will revive global growth. The gains from the March low have outpaced the MSCI Asia Pacific Index’s 48 percent rally in the same period. The broader Hang Seng Composite Index is up 67 percent in that time.The Hang Seng Index’s 14-day relative strength index, measuring how rapidly prices have advanced in that period, was at 68 yesterday, according to Bloomberg data. That’s close to the threshold of 70, a level that some investors view as a signal the gauge is poised to fall.“Institutions are very quiet at this point. They want to buy, but the market has run ahead too quickly,” Leung said. “They’re waiting for the market to pull back to around 17,000 to start buying again.”
Crude Oil Daily Technical Outlook
Written by Oil N' Gold | Mon Jul 20 09 06:48 ET
Nymex Crude Oil (CL)
Crude oil's rally continues today and breaks 38.2% retracement of 73.38 to 58.32 at 64.07 as expected. A this point, intraday bias remains on the upside and further rise could still be seen 50% retracement at 65.86. But upside is expected to be limited by 66.25 double top neckline to complete the correction from 58.32 and bring fall resumption. Below 63.28 will flip intraday bias back to the downside for retesting 58.32 low first.
In the bigger picture, as discussed before, whole medium term rebound from 33.2 is treated as completed with three waves up to 73.83, ahead of 38.2% retracement of 147.27 to 33.2 at 76.77. In addition, Crude oil failed to sustain above both 55 weeks and 55 months EMA. Hence, such rise from 33.2 to 73.83 is treated as a correction in the larger fall from 147.24 only. Fall from 73.83 is expected to resume after current recovery and should extend below 33.2 low. We'll maintain this bearish view as long as 66.25 support turned resistance holds.
However, note that so far, crude oil fails to sustain below medium term trend line support yet. A break above 66.25 will suggest that price actions from 73.83 might be developing into sideway consolidation only, rather than a reversal. In such case, whole medium term rise from 33.2 might still be in progress and focus will then be on whether crude oil can take out 73.83 high decisively.
Nymex Crude Oil (CL)
Crude oil's rally continues today and breaks 38.2% retracement of 73.38 to 58.32 at 64.07 as expected. A this point, intraday bias remains on the upside and further rise could still be seen 50% retracement at 65.86. But upside is expected to be limited by 66.25 double top neckline to complete the correction from 58.32 and bring fall resumption. Below 63.28 will flip intraday bias back to the downside for retesting 58.32 low first.
In the bigger picture, as discussed before, whole medium term rebound from 33.2 is treated as completed with three waves up to 73.83, ahead of 38.2% retracement of 147.27 to 33.2 at 76.77. In addition, Crude oil failed to sustain above both 55 weeks and 55 months EMA. Hence, such rise from 33.2 to 73.83 is treated as a correction in the larger fall from 147.24 only. Fall from 73.83 is expected to resume after current recovery and should extend below 33.2 low. We'll maintain this bearish view as long as 66.25 support turned resistance holds.
However, note that so far, crude oil fails to sustain below medium term trend line support yet. A break above 66.25 will suggest that price actions from 73.83 might be developing into sideway consolidation only, rather than a reversal. In such case, whole medium term rise from 33.2 might still be in progress and focus will then be on whether crude oil can take out 73.83 high decisively.
Gold Daily Technical Outlook
Written by Oil N' Gold | Mon Jul 20 09 06:50 ET
Comex Gold (GC)
Gold's rise from 904.8 extends further to as high as 953.5 today so far and break of 949 cluster resistance (50% retracement of 992.1 to 904.8 at 948.5), indicates that fall from 992.1 has completed with three waves down to 904.8 already. Short term outlook will now remain bullish as long as 931.1 support holds and further rise should be seen towards 992.1 resistance first. On the downside, break of 931.1 will indicate that rebound from 904.8 has completed and will turn focus back to this low.
In the bigger picture, the earlier than expected completion of fall from 992.1 suggests that it's part of the consolidation from 1007.7 or a correction to rise from 865. In either case, there are still some possible scenarios that will bring more consolidation below 1007.7. So we'd stay neutral as long as 1007.7 resistance holds and be prepared for another fall before completing the consolidation. Nevertheless, the case of another deep fall to 865 is not likely now. Anyway, break of 992.1 /1007.7 resistance will indicate that whole rise from 681 has resumed for 1033.9 key resisteance next.
Comex Gold (GC)
Gold's rise from 904.8 extends further to as high as 953.5 today so far and break of 949 cluster resistance (50% retracement of 992.1 to 904.8 at 948.5), indicates that fall from 992.1 has completed with three waves down to 904.8 already. Short term outlook will now remain bullish as long as 931.1 support holds and further rise should be seen towards 992.1 resistance first. On the downside, break of 931.1 will indicate that rebound from 904.8 has completed and will turn focus back to this low.
In the bigger picture, the earlier than expected completion of fall from 992.1 suggests that it's part of the consolidation from 1007.7 or a correction to rise from 865. In either case, there are still some possible scenarios that will bring more consolidation below 1007.7. So we'd stay neutral as long as 1007.7 resistance holds and be prepared for another fall before completing the consolidation. Nevertheless, the case of another deep fall to 865 is not likely now. Anyway, break of 992.1 /1007.7 resistance will indicate that whole rise from 681 has resumed for 1033.9 key resisteance next.
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