The top three US indices have reached historical high again. Similarly, the Hang Seng Index has reached its 23-month high. In the year of 2017, the Hang Seng has been rising every month. Many found it incredible, and thus they reduce their shareholdings, sell, and lock in profits.

Share prices continued to rise for the subsequent months, but turnover has not increased drastically. This shows that the stock market has yet to reach a frenzied state.  Many held a pessimistic market outlook as they did not see turnover soar to great heights, but they turned out to be wrong.

Is a triangle forming?

As at 2 June 2017 (Friday), Hong Kong Exchanges & Clearing Ltd (388.HK) broke above HK$200, and it was up by four percent on a single day. The stock, with an HK$4 billion turnover, became much discussed on the Internet. Netizens have pointed out that an obvious “triangle” is forming in HKEX’s trend for the past six months.

Example of an ascending triangle

Example of an ascending triangle

1-yr stock chart of HKEX (388.HK). Source: Bloomberg

The “triangle pattern” is an important theory in technical analysis. Basically, the tip of the triangle signals that the stock price is likely to register a major break above the resistance line.

On the other hand, chart pattern theories are not easy to master. For all we know, what appears to be a “triangle pattern” to A might not look like one to B.

Over the past 30 years, many academic papers have used mathematical techniques of artificial neural networks to debate the trends, and it worked well. Of course, such complicated calculations would require the help of artificial intelligence.

Artificial intelligence has now defeated the best Go player in the world. I believe that there will be a day when artificial intelligence beats every self-proclaimed technical analysis expert.

Related read: Does the future stock market belong to robots?

Many Hong Kong Property Stocks Reaching or Nearing 52-Week High

Now, other than the few superperformance stocks that keep reaching historical highs, another batch of “sub-superperformance stocks” are catching up, and among which, a strong sector is Hong Kong property stocks.

Cheung Kong Property Holdings Ltd (1113.HK) and Henderson Land Development Co Ltd (012.HK) have reached 52-week high, while Sun Hung Kai Properties Ltd (016.HK) and New World Development Co Ltd (017.HK) are nearing that level as well.

Despite Hong Kong’s property prices repeatedly reaching new highs, the same could not be said for the prices of real estate stocks. Therefore, I think the latter should have room to catch up.