The Hang Seng Index is expected to trade at 18,600-19,300 today

Owing to the sharp rise of Spain bond yield, investor concerns on the Europe prospect, Asian stock market retreated sharply, the Hang Seng Index opened lower and once lost near 600 points. However, as the market is already oversold, it saw technical support during the low level, the Hang Seng Index narrowed its loss and finished the day 249 points lower at 18,952. H share index also reduced 124 points to 9,577. Market turnover rose to HK$65.8bn. Depressed by the selling pressure from Europe and US peers, HSBC(0005.HK) share price dropped 3.1%. .

US stocks fell on Friday after a sloppy debut by Facebook Inc. Market closed at the lowest since 6th January this year. The Dow and the Nasdaq lost 73 points (to 12,369) and 34 points (to 2,778) respectively. Funds continued to flow to US bond as safe heaven with 10 year bond yield remained at 1.73 low level%. Technically, Hang Seng index is oversold, coupled with mainland government may launch supporting policies in the short run, may stimulate market to rebound. Investors would consider accumulating at current level.

Technical Analysis

Hang Seng index gap opened lower and closed with gyro on last Friday, technically, market dropped below 19,000, additionally, the MACDs bearish gap further expanded, reflecting momentum turning weak. However, the 9RSI retreated to 18 oversold zone, which one may technical rebound in short run. The first resistance would be gap level of 19,140, while next resistance would be 10DMA (19,830). For support, the first support retreated to 18,500, while next support would be seen at 18,000.