In this briefing:
1. Petrochina Breakout and Laggard Play
Petrochina Co Ltd H (857 HK) has remains suppressed but with oil perking up there is a laggard upside play taking shape as we begin to see distribution in HK upside leaders. On weakness we like positioning on the long side and can be used as a pair with an index short or one of the steel counters.
Given stock leaders are showing deteriorating upside momentum, we expect laggards to attract more attention.
RSI and MACD breakout patterns outlined as well as the price breakout at 5.10.
A bigger descending wedge also shows promise as a secondary breakout trigger.
MACD pattern resistance will help define the trending capability post breakout.
2. 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.
Get Straight to the Source on Smartkarma
Smartkarma supports the world’s leading investors with high-quality, timely, and actionable Insights. Subscribe now for unlimited access, or request a demo below.
