INVESTMENT DAILY

The Hang Seng Index is expected to trade at 20,900 to 21,300todayHang Seng Index was still falling on Thursday. The index closed at 21,095 points,dropping 206 points. HSCEI closed at 9,469 points, declining 100 points. Turnoverwas $70.6 billion. Espirit(0330)made a huge full fiscal year loss of $3.7 billion, andits annual sales volume slumped nearly 20%. Its stock price declined 2.2%. On theother hand, according to preliminary investigation result, there’s evidence thatCITIC Securities(6030)may be involved in taking advantage of national capital formanagement interests themselves through insider dealing. The stock price ofsecurities industry fell generally.

    Caterpillar announced a shortfall of US$1bn in sales and layoffs of as many as10,000 workers as a result of the shortfall and weakness in various end markets. Itfurther weaken investors sentiment, US stock market continued its weakness onThursday with the Dow once lost 260 points. However, the Dow found support at16,000, bargain hunting interest emerged afterward. The Dow and the Nasdaqclosed 79 points (to 16,201) and 18 points (to 4,734) lower respectively. Funds flowto gold market, gold price rose 2% to US$1,153 per ounce.

    Local market test the 21,000 support again while market turnover shrank toHK$70bn, reflecting investors prefer to stay sideline ahead of Obama and Xi JinpingMeeting. Hang Seng Index is likely to oscillate at around 21,000.

    Technical Analysis

    Since late August onwards, Hang Seng Index tried to break through 22,000 pointsfor five times, but soon later the index fell below this level. On Thursday it even onceagain fell to 21,000 points. Although the index 10DMA(21,622 points)is still above20DMA(21,492 points), MACD bullish gap is narrowing, which means the marketatmosphere seems becoming worse again. If the index can stay above the firstsupport 20,800 points, we can still keep a bullish view on the index. The next supportwould be the lowest level in this month of 20,525 points. On the other hand, the firstresistance would be 22,000 points. HSI falls from 25,634 points in late July to20,525 points in mid-September, accounting for 5,109 points decline, thus 0.382time rebound target(22,477 points)would become the next resistance.