Wednesday, June 22, 2011

Shanghai Composite Short-Term: Positive Divergence

Just a quick note to highlight the positive divergence in the Shanghai Composite, as well as the Shenzhen Index. In recent past, such divergences have resulted in a significant rebound. The upside target at the moment is capped at 2750 for the SSEC, and 1135 for the SZSE. However, as noted in the previous post, if the medium-term triangle pattern was indeed broken last week, i would be careful with any longer duration trades at this stage.

Sunday, June 19, 2011

Shanghai Breakdown, Hang Seng Update

Shanghai Composite broke down through the bottom line of the big triangle. Although oversold short-term, this is a medium to long-term bearish development. Immediate support is around 2580. We will have to monitor if the break holds over the next week or so, and derive reasonable targets for the downtrend if it develops.

Similarly, Hang Seng has broken below the 22400 level outlined in the earlier post and deteriorated rapidly. Currently oversold with a weak RSI divergence and sitting on the bottom of the channel. Looking for a rebound to test the 22400 level in the short-term