Insights Into Trading The CSI 300 Index

The CSI 300 index, the Shanghai Shenzhen CSI 300 index, is currently trading at 3117.32, down 0.53% or 16.64 points. It has a 52-week trading range of 4,919.26 on the high end and 2,821.221 the low end. The index entered the final day of the trading week with 295 members, 210 of which were down, and 76 were up. While the index has a -16.45% year-to-date return, that is markedly higher than the 1-year return of -33.76%. The improvement in the performance of the CSI 300 index is attributed to a calming of the markets in China with commodities prices stabilising (crude oil, iron ore and steel), as well as greater leeway for the Chinese renminbi to find its own equilibria level against the USD.

Technical Indicators for the CSI 300 Index this Week

In terms of the relative strength index (RSI) for 23 June 2016, the reading was 49.44 while the CSI 300 was at 3,117.32. In terms of the Moving Average Convergence Divergence (MACD) on 23 June, the Divergence was at 0.57, the MACD was -2.59, and the signal was -3.16. This is the calmest period where the MACD and the signal are neck and neck. Other technical indicators such as the Rate of Change indicate a figure of 6.96 on 23 June, sharply higher than the -122.99 on 13 June and markedly lower than the figure of 122.62 on 8 June.

Technical Analysis of CSI 300 Index

If we turn our attention to the daily technical analysis of this index, we see some interesting trends developing with moving averages and technical indicators. For example, the CSI 300 index has exhibited some strong buy trends for moving averages and technical indicators in May. The index has had three days of gains and two days of losses over the past 5 days. On Friday, 17 June the index gained 0.51% or 15.68 points, on Monday, 20 June it gained 0.07% or 2.32 points, on Tuesday, 21 June it shed 0.20% or 6.36 points, on Wednesday, 22 June it gained 0.89% or 27.64 points and on Thursday, 23 June it shed 0.53% or 16.64 points.

The CSI 300 index lost 0.03% between 24 May and 30 May, but gained 4.14% from that date until 6 June. From 13 June through 20 June index has shed 1.69% or 53.60 points. If we take the simple moving average over 200 days, the current performance of the CSI 300 is strongly negative and underperforming. However, we get a much more balanced perspective of the index when we take a look at the 50-day simple moving average which cuts right through the middle of the present performance of the CSI 300. An even more accurate description of the index can be seen with the 20-day simple moving average which tracks the movement of the CSI 300 index to a T.

If we compare the performance of the CSI 300 index and the FTSE 100 index, it is clear that they are both following the same trajectory. This is true of many indices given the risk-off approach that was adopted by investors of late. The FTSE 100 index overlay on the CSI 300 index shows near identical symmetry of directional trade.

The CSI, FTSE and CAC 40 index are virtually identical in movement, further validating the pressures that have been placed on equities markets with the federal reserve bank interest rate decisions, the Brexit vote and weakness in commodity prices. Moving forward, it appears as if the improvement in the CSI 300 index will continue after the volatility of the Brexit vote has faded and prices have stabilized.