Thursday, February 23, 2012

Shanghai Composite on the rebound

Those who are still concerned about a Chinese "hard landing" need to look at the chart below (double click for a larger view):


This is a daily chart of the Shanghai Composite going back to April 2007.  The index has broken out above a bearish trendline (pink dashed line) that starts at the Aril 2011 high.  At the least we have short term bullish price action and the indicator below is signaling a strengthening intermediate term picture for the index.

Granted, we have a long way to go but a break out above the 50% and 38.2% Fibonacci retracement lines directly above today's close would confirm the worst is over for China.