China Equity Markets Show Some Buoyancy

The Morgan Stanley China A Share Fund (CAF) has climbed from its June 24 low at 18.21 to this morning’s pre-open high at 22.80, or plus 25%, which has propelled the fund above its flattening 200-day EMA for the first time since early June.

More importantly, however, is the massive-support plateau that has developed between 18.64 and 17.68 during the past 20 months that also represents a potentially-powerful base formation as well.

Purely from a big-picture pattern perspective, my work argues strongly that CAF established a significant bear-market low at 17.68 on Sept 5, 2012, with the first upleg of a new-bull phase ending at the Feb 15, 2013 high of 27.90.

If my pattern work proves accurate, then CAF ended a deep correction of its initial upleg at the June 24 low, and since then has been in the early stages of a new-bull move that should revisit and hurdle 27.90 in the upcoming weeks and months.