UPDATE - HSBC & SHG A

Most HK investors have blind faith in HSBC being the stock that has unbelievable staying power to resist any stock crash and recovers in no time.

Now look carefully at these two charts, the playout in the next 2-3 months is critical.

In the 2 year chart, it hits a high of 152 in Nov 06, but it never manages to get to that price again. Now look further into the 6 month chart, it is obvious that there is a neckline forming at 142. It breached upward through 142 in mid April, hit 142 again at end of June, breached downwards again on 27 Jul and bounced back up. Truly, a multi top with neckline at 142 has been formed. The first high of 148 happened early May and it never reached 147 again since April.

This is a classic case of unloading big chunks of one stock. Usually funds would sell into strength and hold back on weakness to avoid the price crashing thereby forming a double or multi top, thus it takes a 5-8 months to unload without causing major incidence. By mid August, we reach the 5 month danger zone, if it does breach downward and hit 138, stays below 142, you will see a minimum of 132 that takes no more than 2 months to reach this target from the time it breached 142 and stays below.

Watch the playout CLOSELY if you have major holdings in HSBC. It also has -ve implications for the index and other stocks as a whole.

The timing could coincide with a mini crash in SHG A share index [it could easily breach the 5000 mark throwing itself into danger zone as it is in the third leg up phase already]