Saturday, October 10, 2009

Index: HSI

HSI weekly:

The HSI weekly is a picture of wanning momentum accompanied by higher high in prices. Nevertheless, prices have been bouncing off the upper band of the value zone (defined by the 13-week EMA). Also the impulse is green, indicating that both the EMA and the MACD-H are pointing upwards.

HSI daily:

The HSI daily have been flirting with the 21,210 level before closing decidedly above it on September 15. Looking at the charts then, it looked like a potential divergence with the MACD lines, MACD-H and FI is in the works. I took profit on that day for CCB and ICBC but left my other positions running. Looking at the individual charts for CCB and ICBC confirmed my decision to exit.

The index went even higher on the next day on September 16, reaching at the highest point of the year at 21,964. But it ticked down the next day, confirming the divergence is now in the works. I have decided not to short the index but to use the opportunity to get in and take more long positions when the divergence has worked itself out. The reason is that I believe the uptrend is still intact and this is a pullback not a trend reversal. Looking a the upper band of the value zone, that worked out to be around the 20,800 level. So I know that the pullback will reach at least that level. Well, the pullback went to 20,200 level over the next few days instead.

I re-entered CCB and ICB knowing that MACD-H traced a more shallow bottom.

For the past week, I have tried to enter CITC Pacific and China Mobile, both showing excellent chart patterns but to no avail. I did manage to get into Hutchinson W.

It is unlikely that I'll be entering into new positions next week but rather to start taking profits on at least a few of my counters. HSI index maybe still be able to run up a bit more next week. Lets see.

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