China's Shanghai Index: A Bounce Next is Critical for Bulls

Further to my post of November 17th, a bounce next (at the 40 MA...3433) and sustained rally to new highs, thereafter, is critical for China's Shanghai Index.

Otherwise,  a break and hold below the 40 MA will signal that the bearish scenario (that I outlined in the above post) is imminent, in my opinion...all three indicators on the Daily chart below of SSEC  now display "SELL" signals.

Political Unity...An Oxymoron

Some things never change...I wonder if they ever will? Case in point, my post of November 7th, 2012...still seems relevant today, except the U.S. National Debt has now reached $18.6 Trillion and there are even deeper differences, not only between Democrats and Republicans, but also within these parties (on issues such as the refugee crisis, as one example).

I repeat:

"The war between its own political parties is a greater threat to America 

than any threat from its enemies."

I've stopped hoping and am simply waiting to see action now...but am not holding my breath on this...perhaps the next generation will figure things out if ours isn't smart enough to do so...some legacy, eh?

Third Major Leg Down Ahead For Shanghai Index?

You can see my original post of July 8th and four subsequent updates covering China's Shanghai Index here for background information.

In my last update of September 8th, I noted that a bearish moving average Death Cross had formed on the Daily chart and price closed at 3170.45. Since that date, price moved sideways for over a month before it, finally, rallied to where it closed today (Tuesday) at 3604.80.

I have the following observations on the 2-year Daily chart below:

• both gaps down in August have now been filled
• a bearish Head & Shoulders has formed on the MACD Histogram, hinting of weakness ahead
• price is approaching a triple confluence major resistance level around 3750 (comprised of the 200 MA, major downtrend line, and a 40% Fibonacci retracement level)
• a re-test of a 200 MA is not uncommon after a Death Cross has formed and price usually drops  afterwards, often to new lows

I wouldn't be surprised to see some major selling come in sometime soon on this index to, possibly, take price down to around 2500, or lower (what would be Wave 5 for Elliott Wave enthusiasts).

S&P 500 Index: Naughty or Nice?

The Momentum indicator has crossed below the zero level on the following Monthly chart of the S&P 500 Index (SPX), hinting of further weakness ahead.

Major support sits around the 1700 level (confluence of the  50 MA and the 40% Fibonacci retracement level -- taken from the October 2011 lows).

Price on the following Monthly ratio chart of the SPX:VIX rallied at the end of today (Friday) to close just above the 100 level -- which is a major bull/bear line-in-the-sand level -- and, about which, I've written in numerous posts here.

The Momentum indicator is still well below the zero level, also hinting of further weakness ahead for the SPX.

Price on the following Daily chart of the World Market Index did eventually drop to re-test the 1600 level, which was mentioned as a possibility in my above-referenced posts. It, subsequently, bounced and has now fallen back and closed below what was near-term major price support (now major resistance) at 1700 and the 200 MA.

Unless we see price rally and the RSI climb back (and stay) above the 50 level, we could very well see this Index plunge back to 1600, or lower. As of now, all three indicators on this chart contain "SELL" signals...and, in fact, the RSI has now broken its recent uptrend, which, also, suggests further weakness to follow.

Unless we see major buying step in soon for the SPX and the World Market Index, equity markets may very well be in for a lump of coal for Xmas -- and, my 2015 Market Forecast may prove to be fairly accurate -- as of today, there are only six weeks until then.

These three charts should provide clues as to any strengthening or continued weakness in the coming days/weeks.