With investors focusing on more or less irrelevant news out of Europe, regarding whether Slovakia, Malta or some other irrelevant country will vote on the EFSF or not, one risks of losing sight of what’s going on in other markets. Despite our bearish stance, we warned of this squeeze a week ago. Cheap or expensive, markets move aggressively in short time frames. SPX is reaching some short term resistance, but look out for a squeeze in China.
We would like to point out China’s strong performance overnight, where index put on a 3% gain. Note how the big formation has reached the long trend line, and we can expect further gains. Compare the two charts below. Last time food price index took a dive (circle), the Shanghai index put on a close to 30% gain in a matter of weeks.
