Market Recap: A&H both took a deep dip on the 1st trading day of 2019 with decent volume, on bad economic print. Xi’s speech on Taiwan reminds the market of potential tail risk across the strait.
AH Premium: As usual, H reacted a lot more aggressively on bad economic print, while A paused in front of the recent low of 2449. This unsynchronized move pushed up AHP to the day high of 119. Note recently, AHP hit the local peak of 120 before reversing its course after an index crash of 5%.
Data Updates: The rest of the week leaves market with no new China data to digest further, but lot of US data releases and FED talks. With how few hikes being priced in currently for 2019, I suspect any additional color will create more upward risk on rate hikes.
Summary: As domestic updates will be light and international ones most likely not super positive, in my view, market direction for the rest of the week is largely determined downward, with the rate of change potentially to be slowed down. However, VHSI, AH Premium, RSI are all pointing potentially stretched if market drops another 2-3% further, which could be a good entry to bet on a quick rebound.
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