The Shanghai has been meandering between 3000 to 3300 since early 2016. That’s two years of sideways nothingness. The index did try to break out of this range late last year, but it quickly retreated into its never-never land range as the trade talks heated up. Trump-o-nomics have been very positive for the US economy and US stock markets. The same might not be so true for some of those nations who derive an economic advantage from lop-sided trading agreements with the USA. It’s clear from this chart that the Shanghai will remain within this 10% swing-range until more positive news comes out of the trade negotiations.
Meanwhile, short termed traders might consider swing-trading the Shanghai through a favorable ETF representing Chinese shares. The index recently bounced off of its 3000 lows. Short termed traders might consider using a daily chart (the chart on today’s blog is a weekly chart) with RSI, Stochastics and Bollinger Bands on it similar to my short termed market timing toolbox. Please refer to this blog where I explain how I use both the Bear-o-meter and my short termed timing screen on the S&P 500 index. You can simply translate the indicators of the short termed timing model as its explained on that blog, and the methodology, to the Shanghai index.
By the way, keep Wednesday June 6th open on your calendar. I’m on the 12:00 Bloomberg/BNN MarketCall show that day. I’ll remind you again as the date draws closer, but thought I’d give you a heads up today.