Chinese stocks are pulling off an impressive two-day rebound
The big story to begin the new trading week so far has been the continued surge in Chinese stocks as it rebounds on the back of improved domestic prospects with authorities set to lower personal income taxes and bolstering support for the private sector.
The Shanghai Composite index is up by 6.89% over the past two trading sessions so far while the CSI 300 index is up by a whopping 7.56% in that same period. Despite the impressive rally, this merely erases most of the losses seen in the last two weeks for Chinese equities and there is still much work to be done to reclaim the September highs once again.
The brief rally in September saw price broke above the trendline resistance from the start of this year but ultimately there just wasn't enough conviction to push beyond the 100-day MA (red line) in what has been a familiar case for Chinese stocks all year.
Local authorities have continued to step up efforts to bolster the economy and prop up the stock market but it ultimately translates into a min-rally before another heavy wave of selling hits.
The broken trendline will act as a resistance region once again for the time being but for Chinese equities to really turn the corner this year, they must break above the September highs then only we can start talking about a real rebound.
