I think these stocks are getting more and more interesting by the day, so here goes a few more insights into what’s happened, mostly on an entirely technical basis.
Candlestick patterns have started catching my eye, and this stock has had a plethora of great plays for candlestick pattern long entries lately if you’ve been bothered to look closely enough.
Now, if you look closely, when there is new price action upwards – the stronger the better – and the market then gives an indication of strong selling into that strength for an intra-day period of time, the stock subsequently falls. The arrows show this, but there are literally tens more that follow this pattern roughly, although the best seems to be one up-day close, followed by another up-day close with a big downside wick, followed by a down day. There are false positives (20-30% of my total found) but the pattern has been showing up consistently in total almost 20 times since the autumn and takes 2-3 days from initiation to completion each time. That coupled with the recently “up 3 or 4, down 1” system of post-HK$13 break trading pretty much led the stock this high and has been a pretty surefire signal for cheap entries at the completion of the pattern, and a good place to go short less than a week each time, trying to identify 1-2% drop per trade.
Buy on the bottom of tomorrow’s trade could be a good place to go in, so look closely for any more clues offered to you by the 21/252 EMA at HK$15.3 or below. Keep in mind though, both SJM and sands (surprisingly enough) are showing Heads-and-Shoulders patterns here, with the HK$15.8 level being the shoulder top of the second shoulder. The neckline is obviously going up fast, but it’s a necessary word of caution for the bulls – and likewise encouragement for the bears – should there be any further consolidation below HK$15.3. Given all that, keep an eye out for the ADX/DMI positive recross though, it’s at a higher level than the previous bear cross, but with the negative market action this Friday, beating the Friday high might prove a challenge and lead to a just-missed cross here.
Galaxy Entertainment Group:
We have a first-timer here, see if you can spot it:
We broke HK$18.4 and the 21 EMA at the same time to the upside, and with relatively modest volatility to boot. We have gotten downside breaks in crisis times, (and look at the carnage it caused!) but this is the first similarly bullish break pattern. Also look at the 63 EMA rejection this week (Wednesday) which would have paid you nearly one Hong Kong Dollar per share intra-day, and two until Friday! The channel drawn near the bottom identifies the up-trend uncertainty, and the up-trend which is slightly below it acts almost as a volatility springboard: the stock can push off, dampen its swing, or if the volatility is high enough, break right through. On the Wednesday trade, the volatility wasn’t high enough to overcome both this line and the 63 EMA, so it looks like it’s going higher instead. Anyway, HK$ 19.5 does not seem far off from the trend post-plunge, and the next question instead comes in around the HK$20-21 levels for more serious profit taking around the summer highs if price breaks HK$19.2.
MACD 21/63/21 is also beginning to flare bullishly where a clear divergence increase could lead into a ADX/DMI 11-period bullish cross on a higher level than the bearish one, thus forcing a relatively sustained push higher on technicals. The MACD situation though would forecast volatility increases given how far into bullish trend the entire package is and previous price action around the HK$20+ level. Trampolining off the slowest upwards trend line doesn’t help much, given its previous volatility profile and the ~HK$19 consolidation in the past three weeks.
I bet adamant watchers of the RSI are still pushing in however, given how the Wednesday opening got beat back in above a level that showed RSI 21 at above the 50 level, and closing Friday on RSI 21 at 58.8 while shorter term RSI adjusts down even further on its Friday close. Very few people thus read RSI as overbought, and it might come back in vogue somewhere around HK$21-22 assuming a straight run up.
Broad-market wise, HSI could be in worse condition considering the good data that came out of the NFP and further expectations for Chinese policy easing over the weekend, not to mention that Greece is out of the picture, allowing technical momentum players a brief lull until we get back to the problems-of-the-week fundamental players highlighting Portugal… anyhow, intra-week high beta should be the name of the game and cancel out worries groomed earlier this week on beta differentiation before the Greed debt theatre came to an act break.