Hi guys, here’s a weekly wrap-up and an update from my last post on the Shanghai Stock Exchange Composite Index or SSEC (kindly see it here). For those who do not know, the SSEC is the major index of the Shanghai Stock Exchange (SSE) and like the Dow, it can be used as a leading barometer of China’s economy. Another thing, the SSE is the world’s third largest stock market by market capitalization despite not being entirely open to foreign investors. Some of the notable publicly listed companies there are PetroChina and Bank of China. In any case, given China’s rank in the global economy (they are the second biggest economy in the world, by the way), what ever happens to the country as exhibited in the index could also have a big impact on the global stock markets.
Chart-wise, the value of this index is moving in a 2-month descending channel and could continue to move this way. As you can see the index had made a “return-move” after breaking down from a descending triangle pattern. Notice that it met some resistance at the pattern’s support. At present, the current support is seen to be at 2,319.74. In case its value drop further below the 2,319.74 marker, the descending channel’s support could hold on to it. On the upside, if the SSEC starts changing direction and heads up north, there could be some selling pressure on the descending channel’s resistance. If that gets cleared out, the next resistance could be the 2,500.00 psychological number which apparently is very near the inverted flag’s former support. But as long as the descending channel remains intact, we could see the Shanghai Stock Exchange Composite Index continue its down-course.