Quite the weekly range (184-85) on this chart (click to enlarge), but we are at very strong support as indicated by the green line. The more times a stock bounces off of a trend line the more significant this line becomes, and by my count we have 4 separate times that we’ve bounced and had large moves up.
Below is a chart (click to enlarge) of the Shanghai Stock Exchange and what is unusual about the correlation of these two charts is that the Chinese market has barely bounced, yet the China ProShares came down in dramatic fashion. They just don’t seem to be in proportional alignment as they have been in the past.
The small move in the SSE should have translated into a smaller move down in FXP. Anyhow, what’s important here above all else is how this chart reacts now that it’s sitting right on the trend line.
One last point I want to add is that I’m a big believer that the next big growth region is going to be China. They save 30% of their income, invest, make lots of stuff, have a huge population and have had the growth rates to show for it the last 5 years.
Yes they are going to go through hiccups along the way, but they seem to be well positioned to take the reigns from the US in terms of financial superpower. In fact, it seems like they are the only people who can stop themselves from becoming the most powerful country in the world.
The reason I’m even talking about this is you would have thought they would have participated more in the worldwide rebounding equity markets this week. Just some food for thought.