Chart of the Day

Shanghai Stock Exchange (SSEC)

While running our year end screen on international markets we continue to see charts to be bullish on, especially on Emerging Markets like India.

However, today’s chart features another globally important market, the Shanghai Stock Exchange Composite Index (SSEC). One of my favorite patterns is the rectangle shown below.

In his classic text of 1976, the legend William O’Neil discusses bases like this, which consolidate short term uptrends, as reliable continuation patterns. The SSEC has clearly formed a continuation base which also features multiple mini patterns within it, including the mini Head and Shoulders pattern in the middle of the base. These further add validity to the idea that the overriding rectangle base pattern (blue lines) has been an accumulation pattern with institutional money coming into the market.

While still underperforming the US market, breaking resistance at the end of 2021, suggests more upside to come. The behaviour of international markets like China continues to build the bullish case for equities, despite rising odds of a short term correction in Q1.

 

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