New highs across the board here in the good old US of A. Everyone is all pumped up for this Santa Claus rally that seems to be coming. What a way to end the year for the US Stock Market. Even Japan, the Grand Marshal of this year’s parade is hitting new 52-week highs late in December. So we got S&Ps up 30% this year, Japan up over 50%, but China couldn’t be more of a loser (down over 6% YTD). They either just didn’t show up or they weren’t even invited. What a disappointment from the Chinese.
None of this is a secret. Since the beginning of the year, this group has underperformed the USAs, Japans and even the Europes of the world. “Emerging markets are submerging”, has been the joke around The Street throughout 2013. But just when you thought that it couldn’t get any worse for China, I think it just did. It’s not getting much attention, but this breakout two weeks ago in the Shanghai just failed miserably. And as long time readers know, From false moves come fast moves in the opposite direction…..uh oh!
Here is a chart of the Shanghai Composite attempting to breakout of the downtrend that it’s been in all year. You can draw it a number of ways, as you can see I did here, more conservatively or aggressively. But any way you look at it, this is one ugly picture. As the US and Japan are finishing up a year for the record books, China can’t get out of its own way:
And to make matters worse, look at the RSI bearish divergence as it attempted this breakout. Not good. And now the Shanghai is taking out key support and looks terrible. The only way for these guys to get going is to take out the recent pivot highs. This isn’t something I’m counting on, but it really would be a very bullish development for China. Until then, however, there’s nothing to talk about on the long side.
Look at this thing making fresh lows relative to the United States:
Tags: $SSEC $NIKK $SPX $SPY $NKD $DXJ $EWJ $FXI $ES_F $NK_F $NKD_F