At the end of last year we published our China Stock Market Outlook 2018. We concluded that China is one of the leading emerging stock markets. “With the current setup we believe China will be one of the outperformers in 2018 and beyond.”
Moreover, we wrote the following:
Our positive outlook for China’s stock market (SSEC) in 2018 is largely based on the chart setup. The chart below makes the point: China is consolidating for a long time now. The golden investment rule: the longer the consolidation the stronger the breakout and upward potential.
China’s SSEC index (the Shanghai Stock Exchange Composite Index) shows that very important level of 3300 to 3400 points. It is former resistance (tops of November 2016 and April 2017), and could become future support.
Around the same time period we concluded that China looked even stronger in 2018 than our emerging market top favorite of the last 2 years (India), as explained in detail in Emerging Markets In 2018: China, India, Or Both?
In January, we observed this breakout in China: China Stock Market Goes For A Bullish Breakout, China Very Bullish In 2018
In February, the breakout got invalidated as seen on below chart. The correction was stiff, it was global stock market correction, and most markets, especially China, recovered fast.
Right now, we are at an important decision point, say a critical juncture. China’s stock market (SSEC) must go higher from here in order for the bulls to take control. If that does not happen, China will be struggling for a while.
However, if China’s stock market index SSEC rises a moderate 3 to 4 percent it is back in its bullish area. It that were to happen we remain firm that China’s Large Cap Bull Market Of 2018 is the one to focus on, at least for more conservative investors. For more sophisticated investors we created this special report which is still very actual: 7 High Quality Stock Tips For Long Term Portfolios