Emerging stock markets are in great shape. EEM, the leading emerging markets ETF, rose to 40.50 points yesterday, just inches away from a secular breakout.
InvestingHaven forecasted that emerging markets will be strongly bullish in 2018. India is likely to be the outperformer, and China has a fair chance to do pretty wel.
At a time when most analysts and financial institutions were forecasting a China stock market crash on 2017, InvestingHaven’s research team called for a strong rise which, ultimately, materialized. That market call was based on 7 insights from China’s long term stock sarket chart, and the key data point to watch was the rising trend which started in 2014 (purple uptrend on below chart).
Up until this week, China’s stock market, represented by the Shanghai Stock Exchange Composite Index (SSEC), did quite well. It remained in a bullish mode which is defined by the rising 2014 uptrend.
The Shanghai Stock Exchange Composite Index (SSEC) is trading at 3154 points today.
Nasdaq.com tipped a rebound in China’s stock market.
However, this week the SSEC dipped for the first time to 3100 points, which is below the rising uptrend. That could have major implications, at least potentially. InvestingHaven’s research team says that China’s stock market remains bullish as long as the SSEC trades above 3150 points. The opposite is true as well: if the SSEC goes below 3150 points, for at least 3 consecutive weeks, it would suggest the start of a bearish trend.
The WSJ blames the mindset of investors in China’s stock market.
For now, China stock bulls have the benefit of the doubt. That one of two days below 3150 in the SSEC could be a ‘blip’. If the recovery, which takes place today, holds up, the bullish trend continues. However, the coming two weeks will be critical.