shanghai38fibdualresistancetestjan11

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When it comes to  ”Red Hot” stock markets around the world, the overwhelming winner the past 90-days is the Shanghai index, up more than 40%.  Even though the S&P 500 is doing well and is just under 3% away from all-time highs, its performance compared to the Shanghai index over the past 90-days is pretty cool, as it under performed by -37%. (see chart below)

The red hot performance has now created the following conditions in the chart above…The index is now touching the top of multi-year falling channel, at its 38% Fibonacci retracement level based upon the 2007 highs/2008 lows and it created a bearish wick last week at (1) with momentum at the highest level since 2007.

performanceshanghaispy90dayjan11

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One thing is perfectly clear at this time, the trend is “UP” in the Shanghai index. (Above support and all key long-term moving averages).

I attempt to find prices zones where reversals “can” take place (See TB&M Strategy). Time will tell if this will become an important inflection zone for the worlds hottest stock market.

See more of our research….HERE