The Hongkong market started the first trading Monday of the year on an optimistic note with stocks gapping up as much as 350 points up. The index consolidated lower to a low of 15,128 but still continued its rally to close near the highs at 15,563 or 520.5 points up.  This makes it a 1000-point 2-day rally from the close of the last trading day of the year.  Value turnover was relatively higher at HK$49.4 billion compared to Friday’s HK$30.53 billion.

Looking at the daily charts, we can anticipate a consolidation in the next 2-3 days, as the index has rallied strongly already (1000 points or an equivalent of 8-9%). But any downtick should be an opportunity to position trade and buy at good stock prices. We can clearly see a parabola buy signal and a MACD cross signal which could send the index higher perhaps to 18,000 at the first resistance.  It will be choppy but we can be confident and take calculated risks.

Recommendation:  Buy selectively, wait for consolidation days before putting on your full position.