Earlier today I posted a note on the GBP/JPY cross rate. I argued that rates and the Yen, among a few other things, could see some good selling in the future, based on previous patterns that existed on the chart. Taking this analysis a step further, lets look at the Shanghai Comp which has changed direction over the past month after bigtime selling for the better part of the past year. First of all, the analyst community remains solidly bullish China even though investing in China since the beginning of the year would have hammered your stock portfolio. Today, I read another analyst report that says the bottom is in for china and a rally is now coming back to the levels we started 2010 around at 3200. The basis; the PBOC is done raising rates, liquidity is improving; a weak dollar is now occurring and profit margins are expanding. whoopee! How generic!My viewpoint on China is simple; I am bearish. The measures I use to look at trend for this index are bearish and while upside would not be a surprise, I don't believe this is an index that one should be buying hand over fist. There is a correlation to the US 10 year that I showed earlier in the GBP/JPY chart. Also with a weakening Yen, I think the SSEC will find buyers and move upward. Will this be enough to reverse the trend? Unsure so I will wait and see what the chart brings. Call me bearish still with some developments that could argue for a bullish bias.
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