The Hang Seng Tech Index has surpassed the 20% bull market threshold, showcasing strong momentum in the tech sector. Despite this impressive rally, tech valuations remain relatively cheap compared to Western markets. The question arises: can this rally sustain itself if sentiment shifts?
### Key Points:
– Hang Seng Tech rallies past 20% bull market threshold, showing strong momentum.
– Tech valuations are still cheap compared to Western markets.
– USD/CNH breaks key support, hinting at further downside risk.
### Market Sentiment:
Sentiment towards Chinese assets, both stocks and the yuan, has seen a noticeable improvement in recent weeks. This could be attributed to various factors such as easing trade tensions with the United States, cheap valuations relative to Western markets, or optimism that the economy has bottomed following a downturn in property construction.
### Hang Seng Futures:
– Hang Seng Futures are on the verge of entering a bull market, with gains approaching 19% from early January lows.
– The trend remains strong, supported by bullish signals from momentum indicators like MACD and RSI (14).
– Key downside levels to watch are 21,728, 21,377, and the January 13 uptrend. On the topside, sellers may be attracted to 22,500.
### Hang Seng Tech Futures:
– Hang Seng Tech Futures have cleared the 20% threshold for a technical bull market.
– MACD and RSI (14) are trending higher, indicating a bullish bias. However, RSI is in overbought territory, signaling a potential near-term pullback.
– Bulls will be eyeing the October 2024 high of 5,484 as a key level to break for a potential push towards the January 2022 high of 6,010.
### USD/CNH:
– USD/CNH is showing signs of turning lower, breaking key support at 7.3000.
– Bids have emerged below 7.2800, making it a level to watch for short setups after the recent downside break.
– Momentum indicators remain mixed, favoring a neutral bias with RSI (14) hinting at bearish momentum.
In conclusion, understanding these key levels and trends in the Hang Seng Index and USD/CNH can provide valuable insights for investors looking to navigate the Chinese market. By analyzing these indicators and market sentiments, investors can make informed decisions to optimize their investment strategies and financial outcomes.