After making new corrective lows in a press towards a possible sixth consecutive down day, the China Shanghai Composite reversed to close higher today.

So far today the iShares China Equity Index ETF (FXI) is up 70 cents, or 1.6 percent, from yesterday's close at 42.19, and even more from yesterday's intraday low (and violation of its 200-day MA) at 41.91.

The ability of both these China indices to hold today's gains is imperative to their near AND intermediate term outlooks. The SH Comp must exhibit follow-through strength that sustains back above the declining 200-day MA, now at 2780, to trigger initial confirmation that the corrective process is complete.

So far the November-December correction has held above the September upside breakout plateau at 2705-2690, which represents very important support. As long as 2705-2690 contains any additional weakness, my overall technical work in the SH Comp will remain positive.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.