Man Who Called Top of China Stock Rally Sees Rout Worsening (2)
2015-08-06 05:11:53.310 GMT
(Updates today’s trading in eighth paragraph.)
By Adam Haigh
(Bloomberg) -- More than two decades’ experience poring
over stock charts helped Thomas Schroeder lock in profits in
April before Chinese companies in Hong Kong went into freefall.
Now he’s bearish again, betting the slump in Chinese shares
won’t stop anytime soon. The Shanghai Composite Index will
decline to as low as 3,100 in two months, Schroeder said, 16
percent below the closing level Wednesday, despite intermittent
rallies as the government steps up efforts to stabilize the
market. The Hang Seng China Enterprises Index of mainland shares
traded in Hong Kong will drop about 10 percent, he said.
To Schroeder, slowing Chinese economic growth and
collapsing commodities prices are heightening the chance that
the indexes will fall below key equity market support levels.
These are lines on charts that technical analysts say typically
mark a floor for prices. Technical analysts use past patterns to
try to predict future movements.
“For now, we’re in the bear camp,” Schroeder, founder and
managing director at Chart Partners Group Ltd., a provider of
trading strategies linked to technical analysis, said by phone
from Bangkok. “You’re not going to get to it right away. I’m
sure the Chinese government will continue to come in and try to
support the market in Shanghai. But in the next two months,
you’re going to be” reaching these levels.
The former global head of technical research for SG
Securities and Asian technical analysis chief at UBS AG is
watching the 3,400 level on the Shanghai Composite. He expects
the gauge to fall further if that’s breached. It closed
Wednesday at 3,694.57.
April Call
The H-share measure had jumped 37 percent from a low in
October when Schroeder made his call. Though it edged up a
further 5.8 percent to a peak on May 26, it then slumped more
than 25 percent, while a 32 percent rout in Shanghai shares
helped destroy about $4 trillion in mainland market value.
The chartist forecasts a smaller decline in Hong Kong-
traded Chinese equities because the relative strength indicator,
a measure of momentum, highlights the possibility of rallies on
the Hang Seng China Enterprises Index, he said. The RSI for the
H-share gauge stood at 34 on Wednesday, compared with 41.3 for
the Shanghai measure. Some traders say a figure below 30 means
shares are poised to rise.
The Shanghai Composite declined 0.3 percent as of 1:10 p.m.
in Hong Kong on Thursday, with the Hang Seng China Enterprises
Index falling 0.1 percent.
“There are some big moves coming,” said Schroeder.
“Shanghai looks bad and the global cycle is starting to look a
little weaker, and that should pressure these things.”
For Related News and Information:
Hong Kong Chartist Seeing Unlucky Number Eight as RSI Soars
All Those China Stock Bears Just Give SocGen More Reasons to Buy
China’s Great Short Seller Is Now a Bull Predicting Big Gain
Developed Market View: DMMV <GO>
Graphing: GRAPH <GO>
World Trends and Reversals: WTR <GO>
Equity screening: EQS <GO>
Top Stocks News: TOP STK <GO>
To contact the reporter on this story:
Adam Haigh in Sydney at +61-2-9777-8635 or
ahaigh1@bloomberg.net
To contact the editors responsible for this story:
Tom Redmond at +81-3-3201-3789 or
tredmond3@bloomberg.net
John McCluskey
2015-08-06 05:11:53.310 GMT
(Updates today’s trading in eighth paragraph.)
By Adam Haigh
(Bloomberg) -- More than two decades’ experience poring
over stock charts helped Thomas Schroeder lock in profits in
April before Chinese companies in Hong Kong went into freefall.
Now he’s bearish again, betting the slump in Chinese shares
won’t stop anytime soon. The Shanghai Composite Index will
decline to as low as 3,100 in two months, Schroeder said, 16
percent below the closing level Wednesday, despite intermittent
rallies as the government steps up efforts to stabilize the
market. The Hang Seng China Enterprises Index of mainland shares
traded in Hong Kong will drop about 10 percent, he said.
To Schroeder, slowing Chinese economic growth and
collapsing commodities prices are heightening the chance that
the indexes will fall below key equity market support levels.
These are lines on charts that technical analysts say typically
mark a floor for prices. Technical analysts use past patterns to
try to predict future movements.
“For now, we’re in the bear camp,” Schroeder, founder and
managing director at Chart Partners Group Ltd., a provider of
trading strategies linked to technical analysis, said by phone
from Bangkok. “You’re not going to get to it right away. I’m
sure the Chinese government will continue to come in and try to
support the market in Shanghai. But in the next two months,
you’re going to be” reaching these levels.
The former global head of technical research for SG
Securities and Asian technical analysis chief at UBS AG is
watching the 3,400 level on the Shanghai Composite. He expects
the gauge to fall further if that’s breached. It closed
Wednesday at 3,694.57.
April Call
The H-share measure had jumped 37 percent from a low in
October when Schroeder made his call. Though it edged up a
further 5.8 percent to a peak on May 26, it then slumped more
than 25 percent, while a 32 percent rout in Shanghai shares
helped destroy about $4 trillion in mainland market value.
The chartist forecasts a smaller decline in Hong Kong-
traded Chinese equities because the relative strength indicator,
a measure of momentum, highlights the possibility of rallies on
the Hang Seng China Enterprises Index, he said. The RSI for the
H-share gauge stood at 34 on Wednesday, compared with 41.3 for
the Shanghai measure. Some traders say a figure below 30 means
shares are poised to rise.
The Shanghai Composite declined 0.3 percent as of 1:10 p.m.
in Hong Kong on Thursday, with the Hang Seng China Enterprises
Index falling 0.1 percent.
“There are some big moves coming,” said Schroeder.
“Shanghai looks bad and the global cycle is starting to look a
little weaker, and that should pressure these things.”
For Related News and Information:
Hong Kong Chartist Seeing Unlucky Number Eight as RSI Soars
All Those China Stock Bears Just Give SocGen More Reasons to Buy
China’s Great Short Seller Is Now a Bull Predicting Big Gain
Developed Market View: DMMV <GO>
Graphing: GRAPH <GO>
World Trends and Reversals: WTR <GO>
Equity screening: EQS <GO>
Top Stocks News: TOP STK <GO>
To contact the reporter on this story:
Adam Haigh in Sydney at +61-2-9777-8635 or
ahaigh1@bloomberg.net
To contact the editors responsible for this story:
Tom Redmond at +81-3-3201-3789 or
tredmond3@bloomberg.net
John McCluskey