While US investors’ eyes may be on Greece, China’s Shanghai Composite just produced a “death cross,” a longer-term bearish pattern in which the 50-day moving average crosses below the 200-day.
The “cross” appeared one day after the index fell below the January low, which confirmed a long-term ”double-top” reversal pattern (the tops were seen in April and November 2010).
The last time a “death cross” appeared, in March 2010, the index rose slightly for a month before starting a 3-month, 25% slide. US stocks may be able to rise with China going nowhere, but it’s very doubtful they can if China’s in a bear market.
The Shanghai Composite is down 0.8% today, and the Hang Seng is down 1.2%. Most of the rest of Asia is down as well.
China’s stock indexes are among the worst-performing in the world so far this year, which may not bode well for the US market, Barry Ritholtz warned this morning.
