Hong Kong Hang Seng - Support broken, may head south

One of our expert partner, Mr. Brent Penfold was in Hong Kong recently to conduct some workshops and that time, Hong Kong has been hit by category 8 typhoon hard. Brent was stranded in a hotel and the workshop has to be postponed. Category 8 typhoons have wind speeds above 63 kilometres an hour. The stock market was halted on that day (6th of August) abd businesses were closed. Another category 9 typhoon (Typhoon Nuri) hit Hong Kong again last Friday 22nd of August which also forces the stock market and businesses to close that day.

The typhoon has also weakened investors sentiment in the stock market. The benchmark Hang Seng Index (HSI) continue to decline daily when market was re-opened the next day from 22,100 points closing price on the 7th of August to 20,392 points on 21st of August. Since that typhoon incident, the HSI fell 7.7%. The market rebounded since and as at today noon, the HSI closed at 20955.82, after managing to close above the 21,000 points support level it broke few weeks ago.


Daily HSI chart as at noon, 26th of August 2008 using NextView Advisor

The HSI support level was at 21,100 points and I have mentioned previously that markets in Asia are expected to decline. The HSI has broken below the support level and may head south to continue the down trend IF the HSI continues to stay below 21,000 points. The next support level is at 19,000 points, which is a long term up trend line established since year 2004. Major resistance remains at 23,600 points while the immediate resistance is 21,000 points (previous support level).

Commentary and Analysis by Benny Lee