Looks like Asia is about to break out. Two nice ETF’s
China’s Shanghai Index has been quietly rallying since it approached the 2000 major support level once again in mid-June, as shown on the Daily chart of SSEC below. A recent surge has pushed price above the 200 MA, while the RSI, MACD, and Stochastics indicators remained above the zero levels and continued to rise.
Near-term support sits around 2090…a hold above this level should see price continue to rally.
Just about the only major equity ETF that I’ve been comfortable shorting has been Brazil (symbol EWZ). All eyes are on Brazil now, obviously (sort of like all eyes were on China in the summer of 2008 for the Olympics), and who knows how much of the run-up with Brazil was related to World Cup fever, but the chart is showing far more weakness than what you’d expect, given the insane strength of world markets. We’ve been in about a ten dollar range for the past fourteen months on this instrument, and we’re still very much on the high end of that range.
The following 3-year Daily Ratio chart of the Russian Index vs. the German Index shows a very recent bounce in favour of Russia, following a 3 year relative decline in Russia’s strength in the markets. All three technical indicators have now been pulled into positive territory (above their mid-points), and price has bounced above the declining 50 day moving average. Major resistance sits around the declining 200 day moving average.
I’d watch to see if these levels are held in the days/weeks ahead as a possible gauge of any easing of tensions between these two countries and softening of sanctions against Russia over the Ukraine situation…resulting in a strengthening of the Russian markets. Otherwise, a drop and hold below the March lows could spell bigger political unrest and trouble ahead. (more…)
The following 3-year Daily ratio charts compare the price action, strength/weakness, and current price level of the SPX with a number of major world indices, commodities, and 30-year bonds.
You can see, at a glance, that the SPX has been weaker than most of the other major world indices, of late (other than China, Japan, and, to some extent, Australia), and price sits at or near to major support. On the other hand, the SPX has been stronger recently than the NDX and the RUT, as well as Gold, Silver, Copper and Oil. The SPX vs the World Index is slightly weaker, and price sits at major support. The SPX has been stronger than 30-year bonds, but is sitting in between major support and resistance in a neutral zone. (more…)