Shares of Chinese companies fell in Shanghai while trading in Hong Kong left the Hang Seng Index virtually unchanged. The broad Shanghai Composite Index <.SSEC> fell 53.74 points or 1.64% to 3,203.21, just 50 points shy of its 2009 record. China's domestic stock exchange is preparing to absorb $7.3 billion from the initial public offering of China State Construction Engineering Inc., the largest IPO in 2009. The Shanghai Composite is up 76% YTD bringing valuation concern in front.
Trading in Hong Kong saw a sew saw action, the Hang Seng Index <.HSI> touched 19,300 just to climb back in the afternoon session to close 0.64 points lower at 19,501.03. Number of stock that fell came to be the same as those that advanced among the 44 member Hang Seng Index.
Looking ahead, index futures point to a slightly higher open for the S&P 500 and the NASDAQ. Chinese ADRs have upside potential left that can come forth with strong market momentum. China stocks are set to continue to climb in the USA, based on technicals. While most have strong momentum evidenced by 20-DMA, 50-DMA and even 200-DMA, the relative strength indicator is still hardly above 50. This means that with positive market sentiment, China ADRs have room to go on Tuesday.
To go stock specific, please visit the Overbought/Oversold report for today here.