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The Power of the Pattern suggested the Shanghai index was due a bounce weeks ago and that is taking place over the past few weeks (see "Bounce due" here).
Of late the China ETF (FXI) has outperformed the S&P 500 by 14% in the past 60 days. This rally has taken FXI to the top of a multi-year flag pattern. This pattern has to end soon as a breakdown/breakout will take place.
The U.S. has been caught up in the elections, but don't overlook how important this pattern is to the world and the message it will send!
Continued strength in FXI would send a positive message to global stock markets and suggest that portfolio allocations lean towards basic materials.
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