Relief rally?

Markets rebounded today.  I suspect this was due to the strengthening of the RMB.  One could say that this was caused by interventions by the Chinese government or because of market causes.  The rise in the RMB does seem too much too fast and technical selling has come in.  Whatever the reason you pick, the weakness of the RMB which had caused the earlier weakness and crisis of confidence in the markets has reversed today.

RMB Strengthening Against the USD – Too Much Too Fast?

CNH 27082018

HSCEI

hscei 27082018

So is the HK/China market finally turning the corner or is it just another dead cat bounce?  I think the honest answer is no one really knows.  But if you look at the HSCEI chart objectively, the downward trend has not reversed itself.  My yardstick to measure trend change, as I have mentioned before in my last post, is that the 100 day moving average line must cut the 200 day moving average line with both trend lines turning up.  As you can see in the chart above, if anything, the 100 day ma has just cut the 200 day ma downwards not too long ago in July!  I think there is no need to anticipate the markets.  Just let them prove themselves.  If the trend is strong, it is never too late to jump in.

 

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