The MSCI Asia Pacific ex-Japan Index had fallen a remarkable 4.8% to 457.58, below a static support in the low 460s, by mid-afternoon local time in Tokyo. If it fails to hold the present level, then above 425 there are supports only at 449.19 (short term) and 437.18 (short-medium term).
The correlation this week between volatility and percentage change was nearly a perfect negative 1.0 regardless of the level of analysis, and the biggest losers were spread across most of the regions rather than being concentrated in one or two of them.
An exception to the trend was the Australian market, where
indexes showed low volatility and positive momentum with other very favorable short-term technical indicators, although with a few others moving towards overbought status although not yet there.
The All Ordinaries Index closed at 4,971 after a Wednesday intraday high at the open near 5,020. This index remains well above both its 200-day moving average at 4,646 and its 50-day moving average at 4,851. It has a short-term uptrend support line that will pass through 4,932 on Monday and rise about three points per day for the rest of next week. This sets up a continuing confrontation with the strong resistance at the 5,000 level to which I have pointed in recent columns.
Again the Greater China group did not turn in a uniform performance. The Taiwan exchange was the week's biggest loser, as the TSEC/Taiex plummeting 5.9% to close at 8,610. Most short-term technical indicators were neutral, but those that were not were turning negative late in the week as the index penetrated its 50-day moving average (at 8,809 on Friday) to the downside. Momentum was down, turning negative, as volatility rose into the middle of its range. The 200-day moving average was far below at 8,092.
In Hong Kong, the Hang Seng Index tried to match the Taiwanese drop but itself lost "only" 5% by Friday late afternoon local time to find itself at 22,716. The Hang Seng has definitely failed its most recent attempt at a third-fan breakout, and on Wednesday the Hang Seng broke definitely under its 50-day moving average, which stood on Friday at 23,431 with the 200-day moving average below at 21,965.
Momentum turned negative at the end of January and grew more strongly negative over the course of the week as volatility spiked very high. Most other short-term technical indicators, both backward-looking and forward-looking, either turned negative or continued so. Only some indications of being possibly short-term oversold threw any light into the bleak picture.
By contrast, the Shanghai Stock Exchange Composite (SSEC), which was closed Monday and Tuesday due to holiday in addition to the last three days of last week, was for this reason difficult to interpret. Short-term technical indicators are not much help here.
Taking the pre-holiday sessions into the analysis, some of those indicators were turning positive during the week even as others were moving towards showing overbought, while the rest were neutral. What is clear is that the SSEC is struggling against its 50-day moving average (at 2,814 on Friday), through which it broke to the downside on Friday an intraday basis before recovering to close the week at 2,828. (The 200-day moving average is lower, at 2,744.) There is a medium-term descending-tops downtrend that passes through the 2,833 level on Monday, decreasing roughly one point per day thereafter.
In Northeast Asia, the Japanese exchange was closed Friday but the Nikkei 225 closed Thursday at 10,606, up 0.6% on the week. The index's momentum is slightly positive but decreasing as several short-term indicators point towards a definite threat of becoming overbought, while others remained slightly positive. After a brush with its 50-day moving average at the end of last month, now at 10,362, the index bounced but there may be another meeting soon; the 200-day moving average is much lower, at 9,844.
Big news was the KOSPI's collapse of 4.6% in Seoul to close the week at 1,977. On Thursday the index broke under its 50-day moving average, which on Friday stood at 2,041. The 200-day moving average is further below at 1,844, on the other side of the important medium-term uptrend support line, which latter will pass through 2,000 on Monday and thereafter rise a little less than two points each day through the rest of the week. Momentum was down but volatility was up as a few short-term technical indicators called the market almost oversold but others were negative, some very much so, and calling for further correction.
Southeast Asia was also mixed. In Jakarta, the JCI has lately been exhibiting low volatility and neutral momentum but still lost 4.2% to 3,349 by early afternoon local time Friday. Other short-term technical indicators are mainly neutral but some of them are threatening to break slightly to the downside. A month ago the index broke under its 50-day moving average, which stands now at 3,581; it may be headed for a confrontation with its 200-day moving average, which was at the 3,265 level on Friday.
In Singapore, the Straits Times Index fell to 3,090 by mid-late afternoon Friday local time, down 3.8% on the week and on Friday collapsing below not only its 50-day moving average, which declined to 3,198 on Friday, but also its important supports at 3,181 and 3,130, which had sustained it remarkably well in the recent past. Most short-term technical indicators turned negative, with some of them (such as momentum) doing so strongly. Volatility rose to medium-high in its range while the only positive sign was several indicators of potential short-term overselling. The 200-day moving average was further below at 2,979.
Finally in Southeast Asia, the KLCI in Malaysia fell 2.3% on the week to 1,497 by mid-late afternoon Friday local time. So doing, it broke under its 50-day moving average (at 1,526 on Friday) as the 200-day moving average loomed below at 1,423. Short-term technical indicators were either neutral or turning negative, or negative and getting more negative even as volatility was only low to medium. A medium-term ascending-bottoms uptrend support passes through 1,464 on Monday.
In India, the BSE Sensex 30 broke below its 200-day moving average two weeks ago and has fallen ever since. In early afternoon Friday local term, the index is down 3.1% on the week to 17,457. Momentum remains heavily negative even as volatility is relatively low. Most short-term technical indicators confirm a still negative or even strongly negative tendency. Indicators that a short-term oversold situation may develop seem to be confirmed by the mild intraday recovery since noontime.
Aside from the Asia-wide index mentioned at the head of this article, the week can be summed up by observing that four of the 10 markets reviewed here broke under their 50-day moving averages this week, that two others had already done so in recent weeks, and that still two more were this week struggling to avoid doing so. Auguries are infelicitous.
Dr Robert M Cutler (http://www.robertcutler.org), educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada, he also consults privately in a variety of fields.
The correlation this week between volatility and percentage change was nearly a perfect negative 1.0 regardless of the level of analysis, and the biggest losers were spread across most of the regions rather than being concentrated in one or two of them.
An exception to the trend was the Australian market, where
indexes showed low volatility and positive momentum with other very favorable short-term technical indicators, although with a few others moving towards overbought status although not yet there.
The All Ordinaries Index closed at 4,971 after a Wednesday intraday high at the open near 5,020. This index remains well above both its 200-day moving average at 4,646 and its 50-day moving average at 4,851. It has a short-term uptrend support line that will pass through 4,932 on Monday and rise about three points per day for the rest of next week. This sets up a continuing confrontation with the strong resistance at the 5,000 level to which I have pointed in recent columns.
Again the Greater China group did not turn in a uniform performance. The Taiwan exchange was the week's biggest loser, as the TSEC/Taiex plummeting 5.9% to close at 8,610. Most short-term technical indicators were neutral, but those that were not were turning negative late in the week as the index penetrated its 50-day moving average (at 8,809 on Friday) to the downside. Momentum was down, turning negative, as volatility rose into the middle of its range. The 200-day moving average was far below at 8,092.
In Hong Kong, the Hang Seng Index tried to match the Taiwanese drop but itself lost "only" 5% by Friday late afternoon local time to find itself at 22,716. The Hang Seng has definitely failed its most recent attempt at a third-fan breakout, and on Wednesday the Hang Seng broke definitely under its 50-day moving average, which stood on Friday at 23,431 with the 200-day moving average below at 21,965.
Momentum turned negative at the end of January and grew more strongly negative over the course of the week as volatility spiked very high. Most other short-term technical indicators, both backward-looking and forward-looking, either turned negative or continued so. Only some indications of being possibly short-term oversold threw any light into the bleak picture.
By contrast, the Shanghai Stock Exchange Composite (SSEC), which was closed Monday and Tuesday due to holiday in addition to the last three days of last week, was for this reason difficult to interpret. Short-term technical indicators are not much help here.
Taking the pre-holiday sessions into the analysis, some of those indicators were turning positive during the week even as others were moving towards showing overbought, while the rest were neutral. What is clear is that the SSEC is struggling against its 50-day moving average (at 2,814 on Friday), through which it broke to the downside on Friday an intraday basis before recovering to close the week at 2,828. (The 200-day moving average is lower, at 2,744.) There is a medium-term descending-tops downtrend that passes through the 2,833 level on Monday, decreasing roughly one point per day thereafter.
In Northeast Asia, the Japanese exchange was closed Friday but the Nikkei 225 closed Thursday at 10,606, up 0.6% on the week. The index's momentum is slightly positive but decreasing as several short-term indicators point towards a definite threat of becoming overbought, while others remained slightly positive. After a brush with its 50-day moving average at the end of last month, now at 10,362, the index bounced but there may be another meeting soon; the 200-day moving average is much lower, at 9,844.
Big news was the KOSPI's collapse of 4.6% in Seoul to close the week at 1,977. On Thursday the index broke under its 50-day moving average, which on Friday stood at 2,041. The 200-day moving average is further below at 1,844, on the other side of the important medium-term uptrend support line, which latter will pass through 2,000 on Monday and thereafter rise a little less than two points each day through the rest of the week. Momentum was down but volatility was up as a few short-term technical indicators called the market almost oversold but others were negative, some very much so, and calling for further correction.
Southeast Asia was also mixed. In Jakarta, the JCI has lately been exhibiting low volatility and neutral momentum but still lost 4.2% to 3,349 by early afternoon local time Friday. Other short-term technical indicators are mainly neutral but some of them are threatening to break slightly to the downside. A month ago the index broke under its 50-day moving average, which stands now at 3,581; it may be headed for a confrontation with its 200-day moving average, which was at the 3,265 level on Friday.
In Singapore, the Straits Times Index fell to 3,090 by mid-late afternoon Friday local time, down 3.8% on the week and on Friday collapsing below not only its 50-day moving average, which declined to 3,198 on Friday, but also its important supports at 3,181 and 3,130, which had sustained it remarkably well in the recent past. Most short-term technical indicators turned negative, with some of them (such as momentum) doing so strongly. Volatility rose to medium-high in its range while the only positive sign was several indicators of potential short-term overselling. The 200-day moving average was further below at 2,979.
Finally in Southeast Asia, the KLCI in Malaysia fell 2.3% on the week to 1,497 by mid-late afternoon Friday local time. So doing, it broke under its 50-day moving average (at 1,526 on Friday) as the 200-day moving average loomed below at 1,423. Short-term technical indicators were either neutral or turning negative, or negative and getting more negative even as volatility was only low to medium. A medium-term ascending-bottoms uptrend support passes through 1,464 on Monday.
In India, the BSE Sensex 30 broke below its 200-day moving average two weeks ago and has fallen ever since. In early afternoon Friday local term, the index is down 3.1% on the week to 17,457. Momentum remains heavily negative even as volatility is relatively low. Most short-term technical indicators confirm a still negative or even strongly negative tendency. Indicators that a short-term oversold situation may develop seem to be confirmed by the mild intraday recovery since noontime.
Aside from the Asia-wide index mentioned at the head of this article, the week can be summed up by observing that four of the 10 markets reviewed here broke under their 50-day moving averages this week, that two others had already done so in recent weeks, and that still two more were this week struggling to avoid doing so. Auguries are infelicitous.
Dr Robert M Cutler (http://www.robertcutler.org), educated at the Massachusetts Institute of Technology and The University of Michigan, has researched and taught at universities in the United States, Canada, France, Switzerland, and Russia. Now senior research fellow in the Institute of European, Russian and Eurasian Studies, Carleton University, Canada, he also consults privately in a variety of fields.
