Chart Chat's column

17th April, 2000

The primary uptrend was not yet broken – it is still to early to conclude that the bull market has ended On April 11, we noticed that the intermediate uptrend in the HSI was broken. We had also warned that the first major support level for the HSI was 15,000. Dragged by the sharp fall of the Naqsad and the Dow Jones, HSI fell by almost 1,400 points on 17th April 2000 and finished the day at 14,762. Although this was a sharp plunge, we cannot yet conclude at this stage that the bull run has ended as the HSI was still above its primary uptrend trendline. To recap, the current bull-run in the Hang Seng Index was started in August 1998 when it was at 6,500. Subsequently, the index skyrocketed and reached an all-time high of 18,400 in March 2000. While we believe a break in the market’s intermediate uptrend was confirmed on 17^th April 2000, we think we still cannot conclude that the bull market has finished as the current RSI is still above the 50 mark, suggesting there is rather a tug-of-war going on between the bulls and the bears at the 14,500 level. As long as the HSI remains above its primary trendline and with RSI stays above the 50 mark, we think the bulls have not given up and chances that they will return still exist. Further examination of the MACD charts lends additional support for the above argument as it shows that the index’s long-term uptrend is still intact. All in all, we think that the recent sharp plunge in the HSI did not represent the first leg of a bear market. Rather, we think the market is merely undergoing a consolidation. In the near future, we expect the HSI to stay above its primary uptrend trendline and consolidate between 14,500 and 16,000 level