Hong Kong and the Vix are considered leading indicators for the world stock markets. They seem to be signalling the start of a correction. While other charts are looking precarious, they haven’t broken down decisively.
Is this the start of a major correction? It is simply too early to say. We’ll wait next week on the third umpire’s decision.
The market is in a short term counter-trend movement. The long-term trend is still up.
Some Indicators are now reading “oversold”. On balance, the outlook favours a short-term bounce. A test of the November high (around 4800) provides a likely target for any short-term bounce. If the market can rise above that, we can then expect a test of the Santa Rally high around the 5000 level. A break below the 4500 area would be bearish.
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