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The charts, graphs and comments in my Trading Blog represent my technical analysis and observations of a variety of world markets...
* Major World Market Indices * Futures Markets * U.S. Sectors and ETFs * Commodities * U.S. Bonds * Forex

N.B.
* The content in my articles is time-sensitive. Each one shows the date and time (New York ET) that I publish them. By the time you read them, market conditions may be quite different than that which is described in my posts, and upon which my analyses are based at that time.
* My posts are also re-published by several other websites and I have no control as to when their editors do so, or for the accuracy in their editing and reproduction of my content.
* From time to time, I will add updated market information and charts to some of my articles, so it's worth checking back here occasionally for the latest analyses.

DISCLAIMER: All the information contained within my posts are my opinions only and none of it may be construed as financial or trading advice...

Dots

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Tuesday, September 25, 2012

China's Shanghai Index at Variance with CB Leading Index

Data released Monday night shows that China's CB Leading Index spiked up to its highest reading in two years, as shown on the graph below. "This index is designed to predict the direction of the economy." It's a "combined reading of six economic indicators related to total loans issued, raw material supplies index, new orders, consumer expectations, export orders, and housing."


As I outlined in my post of September 20th, the Shanghai Index tells a different story as it trades at three-year lows and threatens to fall off a cliff, but China's Financials Sector has been trading in an opposite direction.

The question is, "Do we believe that the data is actually reflective of China's economy, or is its Index?"

The Shanghai Index has trended in diametric opposition to the S&P 500 Index over the past three years. Which one accurately reflects its country's economy, if either?

No wonder people are confused and are in the dark as to the real fundamentals of both the economy and the companies listed in the stock exchanges (and their actual values)! Hence, they are reluctant to commit any excess cash to the markets, particularly, it would seem, in China.