Finally,
The $SSEC market catches a break. Hopefully it can become a full blown breakout. Love that. My blogs over the last few months have been subtly pointing to Shanghai, looking for a turn which should help spur commodities globally. Shanghai popped up today, closed near it high on a big 2.8% price move.
Notice the divergence in September did not last. I am looking for the current divergence to work this time! Copper has broken out, mining stocks are breaking out and as I said before back on November 23, all the major markets of the world are starting to line up as bull markets currently.
So this 'fiscal cliff ' might lead to some short term weakness, but I like the look of the global picture. Unfortunately, Shanghai has to rally 15% to really confirm the bull market globally, but this rally along with other indicators makes me very bullish. We have not had many distribution days since the November 16th low and todays distrbution day on the Nasdaq was mostly generated by Apple.
Technically, the US charts are at a classic fail point if they were to fail. They roll over after rising up from under the 200 DMA but can't get back through the 50 DMA. So its important that it keeps pushing higher here. I also hate the bond action in the last week. The seem to be pricing in higher risk on the 10 year anyway. The equity markets are trying to break out, and if they can, we could have another December - April rally potentially. Keep tuned to the price action not the talking heads.
Look at the breakouts on BAC, TCK, and others I mentioned recently. This is bull market behaviour.
Good Trading,
Greg Schnell, CMT
