MHI1! trade ideas
Shakeout Incoming?Since my last post, Hsi did crawl up but was rejected strongly from 18400 and is back in the value area around 17500.
The way it is shaping up, i suspect that a strong shakeout is coming up in next few days in which HSI can drop all the way to 16k. If that happens, it will present a very good opportunity to get Long at the start of a possible multi month move UP.
To ride the fakeout, you can sell around 18k with SL above 15th Nov High. There is also a good chance that no fakeout happens and the move simply speeds up from here so manage your risk properly.
Hang Seng Index: Motivated! 💪The bulls were able to push the Hang Seng Index significantly higher on Friday, moving it further away from the yellow trading range between 17,424 and 15,571. However, we still expect the price to return to this area as part of the magenta wave (2) to make a lower low before the reversal occurs. That said, given the price action so far, we have to increase the probability of our alternative to 41%. In this case, the low of the magenta wave alt.(2) would already be in place and this scenario would come into play on a rise above the resistance at 18,898. However, it should be noted that our long-term expectation has already been fulfilled with the completion of the trading range. In both cases, there is considerable upside potential in the medium to long term. The price should clearly overcome the resistance at 20,899.
HSI in a bear market territoryFrom the peak at 22,792 in mid February this year, we are now seeing HSI entering into a bear market territory currently. Some said that the selling has been excessive and possibly a rebound is near the corner due to sellers' exhaustion.
Effective Sept 4 this year, we will see Country Garden being deleted from the HSI after missing payments on its bonds.
Since the epic of Evergrande declaring bankruptcy and shaken the world quite a bit, the Chinese government has been releasing "assuring words' of calming the economy and promised to shore up with stimulus packages. Here's the latest
The market is irrational and thus low prices can get lower and there will be investors who are afraid to catch a falling knife while some contrarians may view this as a good risk/reward ratio due to its excessive pessimistic view that many have on China market. Who's right and who's wrong? Only time will tell.
This property crisis has major consequences on consumers confidence. As I have mentioned before, majority of the Chinese place their savings/live savings on property as a major source of investments. This crisis will lead to them not wanting to pay up for their mortgages less to talk up buying new properties. This will affects the banks in China which are mainly state owned.
Plus, not announcing the updates on the youth unemployment only adds more anxiety to the people rather than eliminate their fear. When things are murky and uncertain, common sense will be to tighten your purse string and buy only the necessity and not spend on the want list.
With the continuous pressure coming from US on its tariffs and stringent trade policies, declining imports and exports, how can China then turn its attention towards building domestic market? Thus, I still hold the opinion that the CCP is still adopting a wait and see approach, releasing its piecemeal stimulus package to test the market.
Let's see how the market turns out later this week.
Going UPGood volume has arrived over the last 2 days. Not totally convinced that Long term bottom is in place but for next few days/weeks, HSI should make its way up towards the top of the parallel channel.
Resistance will come in at 17500, 18000, 18500 and 19000.
Expecting Oct 4 Low to Hold.Move down Today seems to be a breakout from the Triangle. I expect Oct 4 Low to hold and a strong move up towards 20k starts here.
Hang Seng Index: High-flyer 🌟The Hang Seng Index is currently in a strong rise. As the yellow trading range between 17 424 and 15 571 points has already been approached, it is quite possible that the low of the magenta wave alt.(2) has already been set. We give this scenario a 40% probability and it would become our primary scenario if the resistance at 18 898 points is broken. Until then, however, we must continue to expect that there will be another fall deeper into the trading range before the turnaround takes place.
Markets Keep Dropping: Is this Temporary or the Start of SomethiThe week stated with stock markets facing pressure due to a violent attack by Hamas on Israel.
The involvement of other players, notably Iran suspected of aiding Hamas, has raised concerns of a potential full-scale conflict, prompting the United States to dispatch a squadron of warships toward Israel. Consequently, global markets are grappling with heightened turmoil and uncertainty.
In just one week, oil prices appear to have retraced their steps to pre-September levels. However, this situation remains fluid and subject to rapid changes in the days ahead. OPEC+ recently convened an online meeting to evaluate the prevailing oil market conditions.
Following the meeting, no significant alterations were announced, as both Saudi Arabia and Russia opted to maintain production cuts until year-end. In an unexpected twist, Russia decided to lift its Diesel export ban, thereby increasing oil supply and exerting downward pressure on prices. Should tensions in the Middle East not escalate further, it's likely that oil prices may stabilize around the $80 mark.
A similar narrative unfolds for gold. Traditionally, precious metal prices tend to surge during times of conflict. However, the current environment, with high bond yields offering attractive returns, has rendered precious metals less enticing to investors.
Turning to economic data, despite the prevailing high interest rates, the economic system appears resilient. The evolving economic situation has become a focal point for investors. While some are hopeful for a crisis that might prompt central banks to lower interest rates, recent indicators suggest a different trajectory.
In the United States, the creation of 336,000 nonfarm jobs has been a positive development, and Europe is also reporting better-than-expected results.
Bitcoin the Solution?
Right now, Bitcoin is definitely one of the best assets to own.
Over the past seven months, dating back to mid-March of this year, Bitcoin's value has oscillated within the $25,000 to $30,000 range, leaving market participants uncertain about its future direction. However, there's a growing likelihood of multiple ETFs gaining approval, potentially opening the floodgates for Bitcoin investment and making it an attractive option for financial advisors seeking to diversify their client portfolios.
I maintain my investment in Bitcoin, with a particular focus on RIOT Platforms stock, which is closely tied to cryptocurrency production.
While historical patterns suggest that conflicts can lead to temporary market declines, I remain relatively unperturbed.
China
My investment strategy continues to revolve around the Hong Kong index, targeting major stocks at discounted rates.
Recent macroeconomic data reinforces the possibility of an economic resurgence in China by 2024. During the recent national holidays, China's domestic tourism earnings reached an impressive 753.4 billion yuan (approximately $103 billion), reflecting a 1.5 percent increase. These figures underscore the readiness of the Chinese populace to embrace life and engage in retail activities following the economic recovery.
Towards All Time HighStart Buying. HSI at the start of at least multi month may be even years of uptrend.
Strong reversal but resistance remainsThose who hit the bullseye below previous swing low can book profit around 19k.
Bottom not in yet. More consolidation and lower prices to come over the next few days/weeks.
HANG SENG: Buy signal on the bottom of the Channel Down.Hang Seng got rejected on the 1D MA50 two weeks ago and is headed again to the bottom of the Channel Down pattern. The 1D timeframe turned red again on its technical outlook (RSI = 41.280, MACD = -221.700, ADX = 20.498) and this is becoming a buy opportunity again. Every prior rise inside this Channel Down has been at least +10.90% so the one that started on the August 22nd low isn't technically completed. Buy and attempt contact with the 1D MA200 (TP = 19,400).
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Breakout imminentHsi can breakout from this consolidation any moment now. If it breaks down then going Long below the previous swing low at 17500 is a no brainer. Give your trade some room as they may try to hit the SL below 16800.
If it breaks up then we will have to watch the resistance to higher prices to determine if the market has bottomed and is starting a big move up or if more accumulation needs to happen.
Accumulation continues. Volume is highest between 18000-18500. This is where most of the buying is happening. Expecting consolidation for few days, maybe whole of this month.
Short term trend remains DownMarket back between the blue lines as expected. Selling and buying both strong so expect some zigzag. Lower prices to come.
Go Long below one of these 2 lows.Rally from here may very well go on to make the new ATH. Go Long below one of the 2 lows and hold onto this one.
Day Trading the Hang Seng IndexDay trading the Hang Seng Index...explanation of the two trades for the day and the price action that led to the setups.
I talk through my approach to Day trading and how I use the indicators along with how to Manage the Risk while in a trade.
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China's 5Y LPR remains unchanged, what does this meanOn August 21st, the 1-year Loan Prime Rate (LPR) was lowered from 3.55% to 3.45%, while the 5-year LPR remained at 4.20%. On August 15th, the Medium-Term Lending Facility (MLF) rate was lowered by 15 basis points (bp). The market had anticipated a 15 bp reduction in the 1-year LPR rate and a 20 bp reduction in the 5-year LPR rate. However, there isn't a clear correlation between the 5Y and 1Y LPR.
The unchanged 5-year LPR rate might imply that the expectations for a rapid and significant rebound in the real estate market in the second half of the year have been erased. A notable observation is that when clear signals of real estate stimulus policies are released, the reduction in the 5-year LPR rate tends to be substantial. Conversely, when real estate stimulus policy signals weaken, the reduction in the 5-year LPR rate falls short of expectations.
By keeping the 5-year LPR rate unchanged, it indicates that, under the overarching trend and context of a downward shift in the real estate market, the policy emphasis is not on stimulating new real estate sales demand. After all, the future of China's real estate will experience a trend distinct from the past three decades, and both supply and demand will gradually transition to a lower level. Whether it's the early repayment of residential loans by residents or the exposure of local debt pressures, they are both triggered by the decline in real estate sales, and debt pressures are transmitted step by step through financing channels. Compared to policies that stimulate the demand side, the main policy focus is on controlling debt pressures on the supply side. Mitigating the debt pressure triggered by the decline in real estate sales is the current policy priority.
The current situation still involves a process of interest rate centralization, and there is still room for downward adjustments in benchmark deposit and lending rates. The main breakthrough points for alleviating debt pressures lie in two areas: easing household debt pressures and resolving local debt risks. Both of these key actions are closely related to the adjustment of benchmark deposit and lending rates.
China's CPI effectIn July 2023, the year-on-year decrease in the Consumer Price Index (CPI) for residents in China was 0.3%, while the month-on-month increase was 0.2%. The Producer Price Index (PPI) for industrial producers in China showed a year-on-year decrease of 4.4%, and a month-on-month decrease of 0.2%.
The cyclical fluctuations in commodity prices similarly affect the year-on-year analysis of PPI, while the significance of the month-on-month change might be more important. Excluding base effects, the real economic scenario depicted by July's prices indicates a strong demand for services and lower-than-expected industrial production.
Amidst the backdrop of strong overseas commodity prices, July's domestic PPI continued to decline month-on-month, reflecting the persistently weak pattern of actual industrial production demand.
Looking at different industries, the prices in oil and gas extraction, nonferrous metal, and smelting and processing industries shifted from decline to increase month-on-month due to the impact of rising international oil and nonferrous metal prices. However, industries more reflective of domestic industrial production demand, such as coal maintained negative growth month-on-month, contributing to the negative PPI reading. This aligns with the weak construction industry PMI data for July.
In downstream industries, computer manufacturing and smart consumer equipment manufacturing recorded month-on-month increases, indirectly verifying the resilience of China's middle and high-end manufacturing exports. Recent export research indicates that some companies still have confidence in overseas demand and their competitive advantages for the second half of the year, and the negative impact of trade frictions on exports is gradually diminishing
As expected, the year-on-year inflection point for PPI occurred in July, indicating a potential price increase for industrial products. Historical data show that PPI inflection points generally lead those of industrial product inventories, and PPI trends align with the trends in inventory cycles, which indicates a strong indication of inventory cycles. Experience suggests that during the phases of passive destocking and active restocking, industries tend to experience an upward trend in industrial production and profitability. The market expects that after the bottom of the inventory cycle, the economy will undergo a cyclical recovery.
However, there are two distinct features of this inventory cycle. First, the elasticity of real demand during this inventory cycle is limited this year since China's inventory cycle is essentially a shadow of the real estate cycle. Second, PPI as an indicator of domestic industrial demand might experience a phase of "failure".
Stochastic and MACD HSI strategyStochastic and MACD HSI strategy. With Stochastic as main and MACD as filtering for singal noise
HSI 1 mont standard deviation rangeThis is helper indicator to show 1 to 2 standard deviation range of 1 month HSI based on VHSI
Bullish HSI Can Be Supportive For The KiwiNice bounce on HSI, looks like a bottom in 2022 because of an impulse up, now right shoulder at support. China is doing everything to support its economy, but with high rates in other major countries, they just cannot pick up that easily.
However, when economy in China will really start picking up that’s when commodity currencies like AUD and NZD can benefit. Also, recently China announced that they are in trade talks with New Zealand, so maybe NZD has also nice upside potential especially vs USD, now when FED can be close to end the hiking policy. Looking at NZDUSD chart, we can see slow price action and corrective wave structure after an impulse from the lows, which indicates for more gains in upcoming weeks/months.
HSI appears to be getting ready for mark up phaseYou can never tell for sure how much more they have to accumulate/distribute but signs are encouraging that accumulation phase is coming to conclusion and HSI is poised for a run to all time highs very soon.
