Wednesday, August 4, 2010

Shanghai Composite inverse market trend to the Dow, S&P 500

Does it say anything? That from the five last days 29th, 30th (July 2010) and 2nd, 3rd (August 2010, there after just sinking) the Shanghai composite has been trading inverse to the Dow and S&P 500, for example the Dow rallies the Shanghai sells, S&P 500 rallies the Shanghai sells, and also the opposite the Shanghai rallies, the Dow and S&P 500 sells.

The patten? Range trading with sell/buy divergences against the Dow and S&P 500. But the Shanghai can't seem to keep this up, which would make once ponder that the amount of inflows into the Shanghai index's, particularly in a risk averse market (China), are minimal and risk isn't on the table.

At this point the Dow and S&P 500 are both trailing sideways and eventually will trail the Shanghai composite downward, so once should watch (yes algo and human) volume dissipation and tightening spreads for a sell (Dow/S&P500) on the downside.

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