Chart of the day: ChiNext crumbles
In late September, we moaned that stocks on China’s growth enterprise board had moved broadly sideways since the summer and warned it might be time to trim expectations and positions. Somehow it managed to keep its head above the clouds until this week when we saw a big clear-out. The ChiNext index broke decisively below trend-line support, which had held since February, turning moving averages bearish; then the index and its lagging line both slumped below their respective cloud support levels. All elements of this Ichimoku cloud chart are now bearish. Hovering at the low on August 1, a weekly close below 2,580 points will set off another drop to 2,500 and probably 2,425 points because weekly momentum and the MACD have only just turned bearish.
Nicole Elliott is a technical analyst