Chart of the day: Shanghai not out of the woods
As we had predicted two weeks ago, Shenzhen’s A-share index held up a bit better than Shanghai’s. In the last week of January, three of China’s four main stock indices saw weekly and monthly candles close at their lowest levels in more than a year. Technically, this is significant and suggests further losses next month for Shanghai’s A shares. But rather than this month’s slump, we expect slow, cautious moves because of a series of support levels and markets interrupted by the Lunar New Year holiday. Volatility is expected to drop once more and trade well below that in 2015, which will come as a relief for many, and volumes will probably die back to 2014’s daily averages.
Nicole Elliott is a technical analyst