This week we look at UK 100 (UKX) and its position in the world, and follow up on the Hong Kong index (HSI), which we covered last week.
UKX impressive move through long-term resistance
The Relative Rotation Graph above shows the rotation for a group of major world stock market indices against the MSCI world. Furthest to the right but falling sharply on this weekly timeframe is the UKX, which has moved this week from the leading to the weakening quadrant. This indicates that this relatively strong performer is losing relative momentum.
When we zoom in to the daily timeframe, we find UKX inside the leading quadrant. It is almost as far to the right, as the ASX 200 (AS51), with a high JDK RS-ratio. The daily rotations are much more detailed than the weeklies, and the current southerly direction indicates a slight hesitation. The weekly and the daily RRGs show a relatively strong position for the UKX that is stalling, but not yet threatening.
For context, we looked at the monthly chart of the UKX. We can see how it has moved impressively higher since its 2020 low. The advance through the 2017-2019 consolidation between 6,800 and 7,800 has been surprisingly frictionless. The MACD indicator shows the move has got high momentum even at this stage. This is a powerful advance through to the top of formidable resistance. Through this resistance, there is a blue sky.
Jumping down to the daily timeframe, we see a struggle with the February high at 7,683. The UKX recovery for a second time from the 6,900 lows is impressive inside this long multi-year bull advance. Last week it suffered a pullback, taking the relative strength index (RSI) deep down, but it has then turned hard upwards with the price. – the positive price momentum has returned.
UKX has strong uptrend power behind it. It has pushed to the top of significant long-term resistance, hesitated at the break-up point, and seems ready to have another shot and attempt to make the break.
Returning to the HSI
On the weekly timeframe, the tail for the HSI stood out, indicating a lot of power (momentum) behind the move. The rotation had been rapid into the lagging quadrant. Such moves signal a strong relative, in this case, downtrend. There may be a new leg down in an already declining relative trend.
And finally, when checking the weekly HSI chart, we can see where those rotations are coming from. HSI has been in a clear downtrend for quite some time already, but bounced strongly off its 15 March low.
The RRG lines give a clear message, showing a bounce this week to a broken support level. This may be enough to rebuff this counter-trend move. It is very possible for HSI to go for another test of that March low at 18,200.