China Shanghai Composite Index Stock Market Technical Take
Stock-Markets / Chinese Stock Market May 04, 2010 - 11:14 AM GMTSince the start of the year, the Shanghai Composite Index is down about 12%. But this composite peaked back in August, 2009, and it is down about 17% from those highs. We can debate the reasons why the Chinese market is down, but there is no doubt that US equity bulls should be concerned that the Chinese market has been diverging from the US indices.
After all, the Shanghai Composite led the US markets off the bottom back in late 2008 and early 2009. US Equity bulls appear to be ignoring the fact (or just living in a vacuum) that the stock market of one of the world's leading economies has not made a high in over 8 months.
Figure 1 is a weekly chart of the Shanghai Composite Index. Key pivot points are identified by the black dots. Support comes in at 2675 or some 200 points or 7% lower.
Figure 1. Shanghai Composite Index/ weekly
Figure 2 is a daily chart of the Shanghai Composite Index. Key pivot points are identified by the black dots. Resistance is at 2936 and support comes in at 2669.
Figure 2. Shanghai Composite Index/ daily
I would look for the Shanghai Composite to bottom around 2675 and this might be a signal that the burgeoning sell off in US equities has run its course as well.
By Guy Lerner
http://thetechnicaltakedotcom.blogspot.com/
Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.
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