Stocks in China closed up today, January 28, in Shanghai and Hong Kong, breaking a six day losing streak. Shares of other emerging markets were ahead at noon in London. The MSCI Emerging Markets Index was up 1.3%. Six straight declines have taken the index down 9.7% from its 2010 high.
In Hong Kong the Hang Seng Index closed up 1.6%, ending a six-day drop that totaled 7.6%. That decline had taken the index 13% below its November 16 high. The Hang Seng climbed 52% in 2009.
Stocks of big Chinese banks that have taken the brunt of the damage from a government decision to rein in bank lending were among the biggest gainers.
Given all the damage done in the correction to Chinese stocks, it’s hard to say that the January 28 move amounts to a reversal.
 The FTSE/Xinhua China 25 Index, which is tracked by the iShares FTSE/Xinhua China 25 ETF, broke below its 200-day moving average on January 26, for example. (The FTSE/Xinhua ETF (FXI) is on my watch list. You can use my new tool, Jim’s Watch list to follow its price.)
Some traders in Hong Kong and Shanghai are calling this a technical bounce rather than an end to the decline. In Hong Kong, for example, the decline took the 14-day relative strength index on the Hang Seng Index, a widely followed technical indicator in that market, to 26 yesterday January 27. Many traders use a reading of 30 as a signal to buy and that certainly contributed to today’s advance.
In Shanghai the composite market index is flirting with the 3,000 level. There’s decent technical support at 3,000 so that the market could stay at this level for a few days. But the support isn’t strong enough to mark a definitive bottom.
In short, the decline has brought many markets—especially China and Brazil—to attractive levels. But the risk of further declines has by no means been eliminated.
But then again, if the risk had disappeared, prices would be much higher, no?
I’ll post on China and Brazil again later today.
Seaturtlelady…as other rightly answered there aren’t easy ‘recipes’ to answer your question. There are ‘words of wisdom’. One would be the last Jim Jubak’s Book. Between other topics he explains some ‘investor traps’ occurred even to himself. It is almost mandatory to read/study it in order to get the most of his blog and posts.
Thanks for working late Mr J. Cannot say I hang on all the news from Washington, but was not ready for Obama to start building nukes and drilling offshore. I guess that is as far right as he will go. Would be nice if they can get some more peeps back to work.
Healthcare at 17% of the economy feels like too much. Hope they can bend the curve, but too many lobbyists against it,
cheers
FF
Mopama…you sure brought a smile to my face! Thank you for the “thumbs” up!
Like you, I actually trust Jim’s knowledge and his fearless leadership! Of course, it would have been nice to have bumped into ya’ll months and months ago! At any rate, the posters on here have been a bonus too!
Jim,
You are, as always, a class act! I tip my hat to you sir.
Regarding your comment, that was all I wanted to know was your view on those issues. Sometimes, what may seem significant in the Media, may not be after all is said and done. But I enjoy bouncing my own views off of yours, since I respect your opinion.
Which leads me back to the original topic: Do you suppose China could see a bull market while the U.S. is stuck in a bear market this year?
By the way, for me at least, the tweaks that Hugh made in the last hour or so have fixed the problem. Let us know if it’s not fixed for you.
To go way back to the start of this string and the comment from sourlemon on my sometmes cryptic technical comments. When I’m most cryptic it’s because I’m reporting on what–to the best of my ability to tell–is the conventional wisdom among traders on what the technicals mean in a specific market. In my comments on Shanghai, for example, all I’m trying to do is indicate that some traders there think this was a technical bounce. I’m not trying to read the charts myself and comment on that analysis but merely to give you a piece of sentiment that will help you put a market move in context. One of the hardest things to read is a turn in the market trend and I’m trying to see which day to day moves are significant and which are noise.
test comment
Jim, as I cannot either log in, I use that blog yo comment on your two latest posts.
I love the courage you show in sticking to your guns.
The figures are there but my guts tell me it can’t go right, all the more as I sold my short positions this morning. I’ll wait for another 10% down to start nibbling.
Yes, gusspress24… you all should Run26.2!!
It will help keep you sane in these troubling times!
Cheers!
Run26.2 is taking over >.<
Jim, I am logged as you. (mopama here). it looks like that it defaults to last posting id but at the end posts as the ‘regular’ posting. The same happened above. Trying debugging here.
Hmm, was just able to post as myself. Try logging out and then in a couple of times. Worked for me. But that’s just a temporary workaround. We’ll still try to get this fixed ASAP.
Jim again (my posted that initially ran as Run26.2 logout is now showing up as from Jim Jubak. Very strange. This one looks like it will start off at least as Run26.2 again.
Anyway…
As to a lack of comment on the state of the union and the iPad. I think we have a difference of opinion on what constitutes important market moving news. I didn’t hear a single thing in Obama’s State of the Union last night that the market market wasn’t expecting. (The tone, combative and willing to tweak the Republicans as the party of NO! was another matter.) The iPad is significant in the long run for what it means to the wireless service industry but in the short-run, nah, not a big deal. I’ve been concentrating on trying to understand and then post on China because I think the current correction is rooted there. My judgment on where to put my time right now. I understand that in a correction everyone wants to know what they want to know now. It’s a good time to try to help each other by posting what we each know–if onlyi the comment tool will let you. More later.
77-23 on Bernanke re-appointment clouture vote.
Jim here al;though logged in as Run26.2.Logout. Yers, we’re having technical difficulties with the comment function. And unfortunately, the site’s programmer is on a plane and unreachable at the moment. We’ll get this fixed as soon as we can.
DJ… I am having the same issue. Seems to be OK, if someone else is logged in prior (It is showing me as logged in as DJBarber).
Guess it is time for super-programmer Hugh to come to the rescue!
Rats…. time to go to the gym, can’t take it anymore……
Wanted to leave a post to Jims newest blog (Re 10% correction, but it tells me I have to log in to post a comment, So I log in and then it wont let me post, tells me I have to log in again.
This happens from multiple machines, so not a problem from my side…
Errrrrrr!
Looks like Bernanke has the votes to get confirmation (Though it is a bit early to tell for sure…)
Seaturtlelady,
I am impressed. It seems to me that you will have a great and bright future as financial investor. Usually novice are frightned when Mr. Market decides to go South. You are willing to buy more. Very CONTRARIAN! Chapeau!!! Much better than many others behaviours. ‘Wait a little more, Patience and Cash on the sideline’ have been the most recurrent messages spelled by Jim. I have been listening.
Wowwww Gusspresso24…going to read the article now! What you wrote above…” you don’t necessarily need to sell out of it, so much as just wait until the stock rebounds…” describes what I’m trying to do perfectly!!
Thanks a bunch!
To add to what gusspresso said, there is definitely some stress in the comments lately. After two nearly straight weeks of meager gains and/or downright awful days, the market is taking it’s toll on us.
BHP to acquire Athabasca Potash for C$341 million
http://www.reuters.com/article/idUSTRE60R4AJ20100128