Chart Chat's column

10th April , 2000

Saying goodbye to the Uptrend! The uptrend in the Hang Seng Index appeared to have broken on April 5. The current intermediate uptrend in the HSI started in October 1999 and has already run for nearly six months. However, a negative divergence has emerged in the RSI since early January 2000 (a) this year which was followed by a break in its uptrend on 5^th April. While the HSI staged a pullback since that date to come over the trendline again, the 9-day RSI failed to climb above the 50 level and continued to trend downward. These were signals that the HSI lacked the momentum to climb back to the uptrend. An additional bearish signals was that the current pullback/ technical rebound was accompanied by decreasing volume which further confirmed the weakening in market momentum. Should the above analysis holds, the HSI will likely enter into a new phase of “bottom-searching” in the near future. From the technical perspective, the immediate downside target is 15,000 – 11% down from the current level.