• 556 days Will The ECB Continue To Hike Rates?
  • 557 days Forbes: Aramco Remains Largest Company In The Middle East
  • 558 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 958 days Could Crypto Overtake Traditional Investment?
  • 963 days Americans Still Quitting Jobs At Record Pace
  • 965 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 968 days Is The Dollar Too Strong?
  • 968 days Big Tech Disappoints Investors on Earnings Calls
  • 969 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 971 days China Is Quietly Trying To Distance Itself From Russia
  • 971 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 975 days Crypto Investors Won Big In 2021
  • 975 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 976 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 978 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 979 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 982 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 983 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 983 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 985 days Are NFTs About To Take Over Gaming?
How The Ultra-Wealthy Are Using Art To Dodge Taxes

How The Ultra-Wealthy Are Using Art To Dodge Taxes

More freeports open around the…

What's Behind The Global EV Sales Slowdown?

What's Behind The Global EV Sales Slowdown?

An economic slowdown in many…

  1. Home
  2. Markets
  3. Other

China Flirts with a Major Breakout

Headed into the end of last year, China's Shanghai Composite Index had become significantly extended, registering an unsustainable weekly RSI above 90. At the time (see Here), we expected the index to work off its overbought condition, by churning with greater volatility as the market consolidated the massive move that began that summer.

Over the past three months, the SSEC has traded in a wide ~10 percent range, working off the overbought condition as it prepared to challenge the previous highs from 2009. While the week is still young, last night the SSEC broke above its weekly benchmark high set in the summer of 2009.

Shanghai Composite Index 2008-2015 Weekly Chart
Larger Image

Taking its cue from the Shanghai, our equity ETF proxy - ASHR, made a 52 week closing high today, loosely following the consolidation range of our historic breakout pattern.

ASHR 2014 Daily Chart
Larger Image

While the previous closing weekly high for the SSEC is ~3412, the daily close from August 4th, 2009 measures above to ~3471. Assuming the index continues the move higher over the short-term, similar to the breakout leg for the SPX in January 1983, it wouldn't surprise us to see the market retrace back later in the month and test the level one last time before continuing higher.

1982-1983 SPX versus 2014-2015 SSEC Daily Chart
Larger Image

As a reference guide, we shifted the index marginally to match up with the breakout leg in the historic SPX comparative.

1980-1983 SPX versus 2008-2015 SSEC Weekly Chart
Larger Image

Shanghai Composite Index 1980-1984 versus Today
Larger Image

For further reading on this idea and concept, see:

Climbing the Great Wall of Worry in China

Taking Off in the Rain

 

Back to homepage

Leave a comment

Leave a comment