- The Hang Seng has rallied again during the trading session on Thursday, as we continue to flirt with the 200-Day EMA.
- At this point, the market continues to look as if it is trying to break out to the upside.
- Unlike many others, it has the added bonus of a potential reopening trade coming into the picture, as it is the gateway for most Chinese companies that foreign investors want to be looking to.
If China does in fact open up completely, that should continue to be a bit of an upward catalyst for the Hang Seng, but it does seem like we have tried to see this market rally based upon the idea of what could happen, so some of that may already be priced in. This is a perfect example of “projecting into the future”, which markets of course always try to do. It is at this point I have to ask the question of whether or not we have enough momentum to continue going higher. I think we do to a point, but we will eventually start to run into further problems.
Be Very Cautious With Position Sizing
One thing that is probably worth paying attention to is the fact that the market is between the 50-Day EMA and the 200-Day EMA, which will quite often cause a bit of a squeeze in one direction or the other. It does look like we are trying to break out to the upside though, so I think that’s probably the safer idea. In the short term, I think you probably have more of a back-and-forth type of situation where we try to figure out where to go next, and that may be led by actions on the mainland.
As we continue to flirt with the 200-Day EMA, it is probably worth noting that the HK$20,000 level will come into the picture as well, so that is probably what I would consider the major barrier to overcome. Asian stocks in general have been a bit all over the place, so I think it’s probably a situation where you have to look at this through the prism of global risk appetite more than anything else because there is a whole host of problems out there that people will have to pay attention to. Regardless of what happens next, it’s likely that you will have to be very cautious with position sizing.
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