SSEC China Daily Chart Negative Divergence

China releases their five year plan today downplaying growth and encouraging internal consumption.  With the absence of solid retirement plans, it is difficult to create an atmosphere of strong spending like the U.S.  The Chinese have seen food double in price, as well as rents doubled, not exactly the foundation for an economy to start self-sustaining spending.

PBOC targets two more rate hikes moving forward before June.  Thus, an educated guess would be mid March and mid May, 25 bips each at a minimum, with a possible surprise of a 50 bip hike.  These moves will cause selling in commodities and PM's.  Thus, a rate hike is anticipated in the days ahead.

SSEC China daily chart shows negative divergence forming now. The weekly chart keeps traveling out sideways but this may be the point where the breakout of the weekly triangle to the upside was a fake out and price will reverse and come back down thru the symmetrical triangle and out the bottom.  Reference the previous SSEC weekly chart to see the long term symmetrical triangle.  The search box to the right is handy.

 This daily chart may be forecasting the beginning of the popping of the China bubble. SSEC behaves well technically, with a negative divergence spank down in October-November, then a falling wedge, oversold, positive divergence bounce in late January. Now the negative divergence set up is drastic with the histogram and stochastics. Price may settle out in the black circle but the recent rally should fizzle out now and reverse. Note the ADX showing a strong trend back in the Fall 2009 as price climbed but now there is no strong trend with recent price buoyancy. This information is for educational and entertainment purposes only. Do not invest based on anything you read or view here or any links connected to this information. Consult your finanical advisor before making any investment decision.