HK Daily Outlook for August 15,2008
Posted by Book Eater
Hang Seng Market Overview:
Support Retested: Monday is Make or Break Time
Hang Seng Index didn’t have a follow through rally from the commodities as oil fell another $1 in US trading overnight last Thursday prompting HK commodity companies to shed their gains of 5% yesterday. This has led Hang Seng to fall 232 points at the close of Friday. What’s interesting though is that despite the market not having a follow through rally from commodity stocks, it hovered throughout the day, bounced after a clear retest from 21,000 (20994.54 to be exact) and traded slightly above near the support area closing at 21,160. The downtick in today’s price action should not have been a big surprise to traders as the 21,000 key support level was clearly outlined from the breakdown of the box of 22,400 to 21,700 signifying a possible 700 point drop which has happened in the following 3 days. Monday will be a make or break time for Hong Kong. Since Wall Street closed mixed or relatively flat last Friday, HK market’s direction will most probably follow Shanghai’s lead. If it closes lower than 21,000, prepare to cut all positions into a loss as another downside of 700 points could happen. On a brighter note, if Hang Seng opens at a higher note, then stocks could trend higher.
Recommendation: HK market is still in a correction phase. Most traders are advised to avoid trading Hong Kong due to the high volatility but aggressive traders can start probing into some stocks that are forming quiet patterns of support. A break below 21,000 will be a definitive signal that HK has a lot to go down, but if it just hovers above that level, then it will be a see-saw ride again for HK.