future direction of Hang Seng Index

To predict the future direction of HSI and HSIF, pay attention to the following:

- daily short selling record of heavyweight HSI constituent stocks for at least the previous 5 trading days... If HKEx turnovers are high and there is unusually large quantity of short selling of heavyweight (eg HSBC, China Mobile), it is likely things will go downhill.. get it at http://www.infocastfn.com/



- HSIF Open Interest, turnover, long/short ratio, whether it is trading at a discount or premium to HSI.. get it at http://www.cyberquote.com.hk/page/htm/kc/index/index.asp

- HSI Option/Warrant call/put ratio..

- Hang Seng Composite Index Adv/Decl Ratio at www.quamnet.com

- HSI relative to its 250-day moving average. 曹仁超 has repeatedly said the 250-day MA is not 牛熊分界線..

- technical indicators of HSI (I prefer bollinger bands & slow stochastics)... and Moving Averages.

- Patterns (eg, support/resistance, gaps, triangles, double tops/bottoms). But Cho Yan Chiu 曹仁超 said one should not use patterns for HSI.

- HSI overall P/E ratio--the average from 1974 to 2007 is 14.57 with the median at 14.37, while stdev is 3.627. As of April 2008, it is at 15.5.. The monthly average of HSI P/E ratio from 1974 to 2007 is shown below.



- HSI earning yield relative to HIBOR... HSI earning yield's average from 1974 to 2007 is 7.33% (median at 6.95%) with a stdev of 2.08%..... As of April 2008, it's at 6.45%..

- HKEx turnover and Price by Volume to find support/resistance

- HIBOR yield curve , pay particular attention to 1-week rate.

- Price to Dividend ratio...

- HKD-USD exhange rate.

- Banking System's Aggregate Balance at HKMA, 銀行體系結餘, usually below HK$1 billion...

- fibonacci retracement... .618, .5 and .382

- the direction of DJIA, S&P500, Nikkei and various China's indexes.

I did a graph of Hang Seng Index starting from 1987. The Index value is first natural-logged and is then deducted by 7.8. The reason I shifted by 7.8 is because that's the value of the logged Index in 1987. It has nothing to do with the US$ peg. The trendline, the formula and R2 are added by Microsoft Excel. This graph is inspired by the Chan's Channel.