Mike's Mid Day Minute is available to members on Monday, Wednesday & Friday evenings, with one article per week available to non-members. Members please login and see "Mike's Mid Day Minute" in the navigation menu towards the top of the page.

Bullish Shanghai Index a Harbinger for SPX?


Today's sharp 2.5% upmove in the Shanghai Composite from Friday's close shows that the price structure held above -- and lifted off of -- its prior (Aug 13) pullback low at 2564, as well as near-term MA support in and around 2610. Today's up-move and close near the high of the day positions the China equity index for another test of key 4-month resistance at 2700, which if hurdled and sustained should trigger upside continuation towards an optimal measured target zone of 29.25/50, and possibly as high as 3000 to 3100. At this juncture, only a decline that breaks Friday's low at 2589 will compromise the current constructive technical set-up.

The DIVERGENCE between the patterns exhibited by the Shanghai Composite on one hand (bullish) and the cash SPX on the other (bearish) is widening. My thesis is that China peaked first last year in August 2009 and led the rotation of global equity market peaks into 2010. The China equity market appears to be leading the recovery in equity markets out of corrective periods, which eventually should benefit the SPX. The SPX must preserve Friday's low at 1039.74 and climb above 1072 to get traction on the upside.

  • Action-Oriented Trade Set-Ups in Stocks & ETFs
  • Macro Analysis of the Broader Markets
  • Detailed Technical Guidance for each Trading Idea
  • Live Interaction w/ Mike & Our Member Community
  • And Much, Much More!
Join Now! - Special Offer!
Veteran Wall Street analyst and financial author, Mike provides detailed and timely analysis and trade set-ups on a range of markets. Read more...

Have Mike's “Out Front” morning analysis delivered FREE to your email inbox twice weekly!