China sounds the need for stimulus

١٥ ديسمبر ٢٠٢٣

A few weeks ago, we discussed the reversal in Chinese indices and the negative implications for American stocks. Yet, this week, the worse-than-expected data in China’s economy sparked talk about the need for additional stimulus measures in order to boost the post-Covid-19 recovery. At the same time, the FOMC unveiled the U.S. central bank might be a step closer to easing restrictive monetary policy. Both easing in the United States and stimulus overseas are likely positive factors for the U.S. stock market. In fact, to our surprise, we have already seen the Dow Jones Industrial Average reach a new all-time high on the eve of the FOMC press conference. With the Nasdaq 100 Index and S&P 500 Index hovering slightly away from their all-time highs, we would not be surprised to see them overcome these levels as well. We will monitor the situation in the foreseeable future and update our thoughts with the emergence of new developments.

Illustration 1.01

Illustration 1.01 shows the daily chart of the Hang Seng Index and Shanghai Composite Index.

Technical analysis gauge
Daily time frame = Bullish
Weekly time frame = Bullish
*The gauge does not necessarily indicate where the market will head. Instead, it reflects the constellation of RSI, MACD, Stochastic, DM+-, ADX, and moving averages.

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DISCLAIMER: This analysis is not intended to encourage any buying or selling of any particular securities. Furthermore, it should not be a basis for taking any trade action by an individual investor. Therefore, your own due diligence is highly advised before entering a trade.