Legacy Funds

Liquid – Transparent – Alt Investment Strategies

What’s up or down with Shanghai?

The Shanghai index has obviously been on a major tear lately, rallying something like 100% this year alone, wow. The index made its lows in October of last year at 1664.92, made higher lows in March 2009 when the SPX made lower lows, and recently went over 3400 before a 4.4% decline last week. China is running at a .87 6 month correlation to the SPX, that is pretty high. However, and what is most interesting is both the Shanghai and SPX are at exact 38.2% retracements from their low to their high even though the lows were in different months.

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Above was the Shanghai so let’s compare to the SPX below:

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Furthermore, the Shanghai has already turned down from its 38.2% retrace experiencing a down week last week whereas the SPX is likely to follow suit this week — but then again it may not. Only time will tell obviously, but worth observing.

These are difficult markets to play right now, both long and short, but find what indicators you like and can trust, and keep emotion out of the decision making process.

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August 10, 2009 - Posted by | Legacy Funds | ,

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