Equity Indices Monthly (Apr ’16)

The Hong Kong Hang Seng Index rally from the 18,279~ low of February is finding difficulty clearing the 20,700 and 20,850 retracements, as fresh selling pressure appears at 20,875~. Focus is turning to congestion around 20,000, but any immediate break is expected to settle into consolidation as monthly momentum turns mixed and the Tension Indicator continues to improve.

Longer-term studies, however, are bearish, suggesting subsequent continuation of the May 2015 bear trend, with a close below 19,000 opening up critical support at 18,279. A further close beneath here will turn investors outright bearish and confirm fresh losses towards the 17,500, (61.8%) retracement of the 2008-2015 rally.

Anticipated losses will be delayed above 20,850/75~, but congestion around 22,000 should provide a barrier, as investors adopt a sell-into-strength strategy.

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