MONTREAL - Short-term technical indicators for the MCSI Asia Pacific Index
improved slightly last week even as the index declined 0.7% to 115.97, with
Shanghai leading the way down with a near 5% fall.
The MCSI Asia Pacific Index is respecting the resistance at 118.7 after
breaking out of its short-term descending-tops downtrend resistance earlier
this month, even if several of the national
indexes reviewed here are still constrained by theirs. Its post-crisis
third-fan breakout, however, is at 134.12, above several important static
medium- and long-term resistances.
The past week's performance saw a moderately negative volatility-price change
correlation (-0.35), even as overall volatility increased slightly. Removing
Malaysia, which had an uncharacteristic week, from the mix increases the
absolute correlation to -0.67. There was some moderate intraregional cohesion.
The traditionally super-volatile China-Hong Kong-India trio was more volatile
than the other markets taken together, for the first time in over two months.
All national markets reviewed here were down on the week with the exception of
South Korea, which was up only slightly.
The Australian All Ordinaries Index was the fourth-least volatile and the
fourth-least bad performer. Momentum turned negative in the Australian markets
on Monday and accelerated after Wednesday, when volume for the week peaked.
Volatility is up and a couple of short-term technical indicators are
threatening to go unfavorable. Friday's intraday low (also intraday low for the
week) in the All Ordinaries Index at 4,131 was only slightly above the
long-term descending-tops support (based November 2007) that on Friday passed
through the 4,117 level. But the decline after Monday came after hitting a
short-/medium-term descending tops resistance (based April 2011).
In Northeast Asia, Seoul had near-median volatility and was the week's best
performer while Tokyo was the third best (or least-bad) performer on the lowest
volatility. The KOSPI gained 0.2% on the week to 1,838. Short-term technical
indicators are mixed with momentum nonexistent, volatility highly erratic, and
other leading indicators threatening a pullback. The weekly intraday high,
Thursday at 1,870, failed to penetrate the long-term resistance (based May
2008) just above 1,885.
Beyond that is the lower bound, in the low 1,900s, of its higher post-crisis
trading range (October 2010 - August 2011). Even if it overcomes that
resistance, however, there is an early August gap-down from 2,019 to 1,967 that
it would still have to surmount. At the same time, the KOSPI is supported by an
ascending-lows uptrend line (based October 2008) that passed through 1,771 at
the end of the week that represents an attempt to re-support an upside breakout
from the ascending triangle that was reversed two months ago.
The Nikkei 225 in Tokyo fell 0.8% to 8,679 as short-term technical indicators
superficially replicated Australia's pattern except more definitely
unfavorably. Momentum turned negative early in the week, relative strength has
weakened, and other short-term indicators are on the verge of reversing to the
downside.
Shanghai and Hong Kong were two out of Asia's three most volatile and biggest
losers. The SSEC in Shanghai, which was up 3.1% a week earlier, lost 4.7% last
week, Asia's worst performer. It closed on Friday at 2,317 after short-term
technical indicators turned negative on Monday and worsened throughout the week
but without getting near overbought. The current level rests infinitesimally
below the 2,319 long-term support (based February 2009). Below there 2,200
offers possible support, then 1,937. The lowest close during the 2008 crisis
was 1,723.
The Hang Seng Index in Hong Kong is in slightly better shape, if only because
of its spectacular decline since mid-summer. Last week it fell 2.6% to 18,026,
still constrained by a short-term descending-tops downtrend (based August
2011). Momentum fell just below neutral, but other short-term technical
indicators remain generally favorable. However, there is long-term static
resistance in the 18,900s even the index surmounts the short-term dynamic
resistance just mentioned.
The TSEC/Taiex in Taiwan was the third-least volatile in Asia but with
near-median performance, falling 1.4% to 7,255. With a weekly intraday low on
Friday of 7,205 it seems to want to test its long-term support (based February
2009). Momentum turned negative last week and some leading short-term technical
indicators are threatening to move to the downside although others remain still
favorable.
In Southeast Asia, Malaysia's KLCI turned in the least-poor performance,
falling only 0.2% to 1,439. The index has overcome its short-term
descending-tops downtrend will encounter significant resistance medium- and
long-term resistance to the upside initially around the 1,484 level and ranging
up to 1,517.
Indonesia's JCI fell 1.2% to 3,621 as short-term technical indicators also
weakened a bit. Momentum turned slightly negative while leading indicators were
split, some remaining clearly positive and others threatening to reverse to the
downside. Volatility was generally low. In Singapore, the Straits Times Index
fell 1.2% to 2,712 with short-term technical indicators similar to Jakarta's
and longer-term indicators similar to Taiwan's. Volatility is low and momentum
is close to neutral.
In South Asia, the BSE Sensex 30 was the second-least volatile but third-worst
performer on the week, losing 1.7% to 16,786. Its long-term technical
characteristics resemble the KOSPI's in Seoul while in the short-term its
technical indicators weakened on balance like Taiwan's. There is an important
very short-term resistance around 16,920, a medium-term resistance in the
17,900s, and still higher the same descending-tops downtrend resistance (based
November 2010) that will soon threaten to become a long-term constraint.
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.
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