China's relief stagnates.

Before the turnaround in SPX in July 2023, we pointed out to the roll over in the Chinese stock market and its implications for the U.S. market. Then more recently, we saw how these markets continue to be intertwined when Chinese regulator stepped in and calmed down the market, resulting in both American and Chinese stocks enjoying a relief (or perhaps even reversing). However, in the past three days, we started to notice that the momentum began to decrease in the Chinese indices. Therefore, we think it would be proper to wait a little bit more time before committing to the bullish outlook.

Illustration 1.01

The picture above shows the daily chart of MACD, which hovers just slightly below the midpoint. If it breaks above this level, it will bolster the bullish case in the short term. However, the failure will be strongly bearish.

Illustration 1.02

Illustration 1.02 shows the daily chart of the Hang Seng Index. The yellow arrows indicates the past three days, with each having a lower low than the prior one.

Illustration 1.03

Illustration 1.03 displays the daily chart of CSI 300. The yellow arrow highlights the initial spike in CSI 300 after the regulator’s intervention.

Technical analysis gauge
Daily time frame = Slightly bullish
Weekly time frame = Neutral
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

Please feel free to express your ideas and thoughts in the comment section.

DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.

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Illustration 1.04

The picture above shows the daily chart of the Hang Seng Index. The yellow arrow indicates the rejection at the sloping resistance.