China has become critical factor in the global equity markets in the 21st century.
Today we look at the ETF $FXI for China’s stock market and show how U.S. investors have received several timely bullish and bearish signals over the past decade-plus (when comparing FXI with the S&P 500 – $SPY).
In today’s chart 2-pack, you can see how the S&P 500 has been in an uptrend since the 2009 low while the China ETF $FXI has traded sideways. Each time $FXI has bumped into resistance at line (1) it has formed a bearish reversal (marking a short-term peak).
More importantly, those reversals have been canaries in the coal mine for US investors… marking a trading top for the S&P 500 each time as well.
$FXI is currently testing 11-year resistance at (2), where it is attempting to create the largest bearish reversal since the 2007 highs. And this is occurring as the S&P 500 tests channel resistance.
If $FXI breaks down through its uptrend support line at (3), it would send a negative message to the S&P 500.
What would stock bulls in the states and China love to see? An upside breakout of 12-year resistance!!!