By Chris Becker
So what happened in major markets over the Christmas/New Year break? Nothing much of note, although the European New Year started strong last night as manufacturing production edged past 2011 levels, sending Euro stocks up higher while US Treasuries rallied sending 10 year yields down from their pre-Xmas high. Chinese markets were more wildly traded over the break compared to the thin volume elsewhere but remain somewhat depressed – except iron ore of course!
On Friday, the Shanghai Composite had a slight uptick, but is basically treading water in a deceleration around tentative support at 3100 points. The daily chart below shows the correction since the November high where price action is hovering around the 200 day moving average, making neither new highs or lows. As momentum remains negative and price hasn’t cleared the high moving average, I still contend the target for this move is the next support level at 3000:
