Tag: Confirmed Uptrend

The CSI 300 rose 2.6% for the week as market reopened after the long holiday. The market remains in a Confirmed Uptrend with five distribution days. Our conviction increased as the index rebounded after hitting a new low and had a three-day gaining streak. We believe the 50-DMA is providing effective support. Even so, volume has been lower than average, indicating cautious sentiment due to uncertainties around Sino-U.S. trade talks that began Thursday; the market has been cautiously optimistic. As we approach Q3 earnings, investors are focusing more on the domestic. We see the CSI 300’s next support at its 50-DMA (~3,800) and immediate resistance at September highs (~4,000). We reiterate the importance of heavy trading volume to confirm a strong rally. Until then, investors are advised to stay patient and focus on leading stocks that have good earnings estimates and have recently broken out.

The CSI 300 dropped 2.1% for the week on lower volume and remains in a Confirmed Uptrend. The number of distribution days is now at five over the past three weeks. We are watching to see if clustering becomes an early sign of market pressure. The market continued moving sideways as trading volume further declined. With the National Day holiday approaching, wait-and-see sentiment is strong; conservative investors tend to reduce positions or hold cash in case of uncertain events in overseas markets during the holiday. China’s industrial profits fell 2% in August, reversing the previous month’s gain (2.6%) and a sign that the economic growth is still bottoming. The possible impeachment of U.S. President Trump cast another shadow over trade tensions. Although the market is in an Uptrend, we remain cautious due to recent heavy selling pressure. The CSI 300 is testing 50-DMA support and we expect consolidation to continue in the near term. Investors are advised to stay cautious, focusing on quality growth stocks with good prospects.

The CSI 300 fell 0.9% for the week on slightly lower volume. The market remains in a Confirmed Uptrend with three distribution days. Disappointing industrial production, consumption, and fixed-asset investment data for August revealed pressure on China’s economy, which impacted market sentiment. The new one-year Loan Prime Rate was cut 5bps, in line with consensus and thus not a great boost to the market. The CSI 300 has immediate support at ~3,890 then at its 50-DMA (+3.2%). We look for immediate resistance at ~4,000 then at ~4,100. As global liquidity eases and positive domestic policies are introduced, risk appetite has increased. The electronics sector outperformed this week as Huawei and Apple unveiled new products. We expect the CSI 300 to continue consolidating in the short term, as sentiment may improve ahead of the National Day holiday, coupled with continued uncertainty surrounding trade talks. Investors are advised to be cautious and focus on quality growth leaders that have good prospects and benefit from recent policies. Avoid chasing extended ideas.