Monday, September 21, 2009

Shanghai Index And The S&P500



Above is a daily chart of the S&P500 and the Shanghai index. As you can see the Shanghai index is showing a bearish divergence compared to the S&P500. The S&P is clearly above its August high but the Shanghai index is not only below its August high but below its 50 day moving average as well.

I think this bearish divergence may put pressure on the S&P but the market to short would be the Shanghai index as this index is the weaker of the two. If you place a stochastic oscillator on the shanghai index you will see that the oscillator has just given a sell signal. I'm looking for the Shanghai index to test its September low however a move above last week's high will negate the bearish outlook.

8 comments:

Anonymous said...

How do you short the Shanghi Index?

Anonymous said...

You become chinese.. Unfortunately there is no international trading at the shanghai stockmarket, all chinese funds and etf:s are trading other chinese markets

Kevin said...

I agree, there is no way to directly trade the Shanghai index. The reason I posted a chart about this index is because I believe this market leads the S&P at times.

SS said...

Trading the FXI or FXP would give you the needed exposure to the Chinese markets.

mingworld said...

I think you can short the Chinese by using UltraShort FTSE/Xinhua China25 Proshares (FXP)

http://www.proshares.com/funds/fxp.html

Cheers,

Ming

mingworld said...

The fact that 60 Day EMA of Shanghai Index is flattening and turning down is not a good sign. I think 60D EMA is the life line of the Shanghai index.

Anonymous said...

Kevin,

you HAVE TO make a post about USO asap. in my opinion it is breaking down from the huge triangle consolidation. Definitively worth a post from the master.

Joe

Anonymous said...

Yes I have to agree, I think USO is worth discussing here if possible .

Thanks
mike

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