Written By Basilio Chen

VN:F [1.9.16_1159]
Rating: 0.0/5 (0 votes cast)

China market is giving early signs of temporary stabilizing of economic activity.  We would expect the market be 6-9 month ahead of the economy.  Notice that SSEC (stocks) hit a “capitulative” sort of low mid June 2013 while Copper prices (fundamental economy) hits a similar low in March 2014 (almost 9 months later).

image

Copper prices have retested the 3.00 prices with increased negative divergence signifying a base is being build.  With the global economy in slow down mode including China.  Activity here is key for revealing fundamentals in the Chinese economy.

If SSEC prices go pass the next resistance of 2450, we would expect a confirmation with Copper prices moving up.  Copper resistance is at 3.30.  However if prices go below 3.00 and break below 2.85 significantly, we would have a serious fundamental problem.

image

With all this said, SSEC next resistance of 2450 and then 2500 will determine the next move.  However, this strong move (nearly 130% up) is reaching now overbought conditions with wide resistance at 2450 and 2500.  We can expect prices to come to 2300 or 2250 to rest which will allow us to see the next move ahead.

At this moment, we are watching the minuteness of a macro trend reversal which obviously has many twist and turns.  If we can be 80% it would already exceptional.