In the wake of sub-par economic numbers and earnings reports,
the Shanghai Composite (
) refuses to break down technically.
[caption id="attachment_69730" align="alignright" width="300"
Over the past two weeks, the Chinese economic figures have been
less than impressive. GDP growth failed to meet investor
expectations, coming in at 7.7%, slightly below most forecasts in
the 8% range. Further, reports from within China indicate that
corporate profits among stocks listed on the Chinese benchmark
continue to flatline
, as has been the trend since 2011.
As well, a strengthening Renminbi - the currency once again
hit fresh highs against the dollar
- theoretically should continue to pressure the Shanghai Composite,
as foreign inflows grow costlier in real terms.
In spite of these negative headlines, the Shanghai Composite
continues to find support at its 200-day moving average. For the
second time in the past three weeks, the exchange has rallied hard
off of its 200-day moving average.
As long as the Composite holds this level, traders can stay
long; a break through the 50-day average could see the Shanghai
Composite test the highs from earlier this year. However, if the
Shanghai Composite were to break and close below the
psychologically important 200-day moving average, watch for the
exchange to move substantially lower.