Scary thoughts: Hong Kong to make its newest low?
Hang Seng Index closed down lower than 21,000 today to 20,930.67, amidst a 5% drop and 10% daily stock limit drops for Shanghai. It was a harrowing weekend indeed as selling pressure from this year’s Olympics host has distinctly decoupled from all markets. It has been in a constant downtrend, albeit see-sawing violently within days. This breakdown is very important as we will soon test the March 18 lows. This is just approximately 350 points away. 1 day of downtick is all we need, after which the August 17 lows which rests at 19,386.72 will be the next support. Hong Kong’s correction is really killing all traders softly. Intraday chart suggests that we are just at the beginning of another trading box. It’s just a matter of time before HK slips down again.
Recommendation: Detach yourself from the Hong Kong markets for the meantime. Go on vacation first as we approach this long weekend in the Philippines. I know it is still Monday but the carnage will come, although we may see sharp intraday see-sawing moves upwards, whipsawing oblivious day traders. Avoid HK market until the market bounces with a sustainable trading range.
