Chart BookChart of the day: Sentiment headwinds in Shanghai

Mainland equities enter November on a rising tide of optimism, but the Shanghai Composite Index faces near-term sentiment headwinds as it tries to sustain a break above its 2013 high point. Success would suggest the index has broken its long-term downtrend, while failure could prompt a swift fall back below 2,300 points, with 2,200 the next technical support thereafter. An inflection point is close to hand, especially when looking at the market by sectors. Industrials have already broken above the 38 per cent Fibonacci resistance of the 2011-13 reversal. The break higher is an important positive technical step forward.