In this briefing:
1. Baking in a Trade Deal and China Fade the Fact Levels
Shanghai composite breakout above 2,650 is a bullish catalyst for HK and pushing into secondary resistance. Typically, a re test of the breakout zone is often seen.
Shanghai A50 futures face a formidable barrier that has capped rally attempts for the last 7 months.
H share and the HSI are both exhibiting signs of distribution into strength. Choppy rising patterns warn that the rise is getting extended with breadth starting to struggle.
Tencent is exhibiting upside momentum deterioration amid divergence.
We question just how much trade deal euphoria is now priced into the HK market (and for that matter global cycle) and must take into account odds of a deadline extension deflating the current rally as the reality sets in that major trade issues remain unsettled.
Any trade deal would give us an exhaustive spike higher while an extension would knock us back to re cycle supports.
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