Hang Sang Index on a knife’s edge

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In the past the Chinese/Hong Kong stock markets have often led other global markets at turning points. Right now, the Hang Sang Index is at a critical juncture.

As seen in the chart below, the Index failed to make new highs on its recent rally attempt last week by stalling at resistance (upper red line). Kevin Lane of Fusion IQ said: “The Index has rolled over in the last few days and is now test­ing its uptrend line again (green line). China led the S&P 500 lower by correcting two weeks ahead of the S&P 500 during the S&P 500’s approximate 17.0% peak to trough May to July 2010 correction.”

With a further decline of 1.9% this morning the Hang Sang has now broken its uptrend line. One needs to keep a close eye on whether the break is confirmed over the next few days as this could be a leading indicator of what happens on bourses in the U.S. and elsewhere in the world.

Source: StockCharts.com

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