Stocks and commodity markets rallied on Thursday on news of an expansion in manufacturing in China, which is the world's biggest user of commodities. A few weeks back I wrote that weakness in Chinese shares was one of the factors weighing on commodity markets (along with a stronger dollar). With the dollar looking overbought and vulnerable to profit-taking, attention is now turning to China. And the news there is good. Chart 1 shows the China iShares (FXI) surging 2.5% on Thursday to the highest level in three months. The FXI has also broken a five-month resistance line. That's giving a strong boost to Emerging Market iShares (Chart 2) which are soaring (thanks also to big gains in Brazil, India, and Russia).
About the author:
John Murphy is the Chief Technical Analyst at StockCharts.com, a renowned author in the investment field and a former technical analyst for CNBC, and is considered the father of inter-market technical analysis. With over 40 years of market experience, he is the author of numerous popular works including “Technical Analysis of the Financial Markets” and “Trading with Intermarket Analysis”. Before joining StockCharts, John was the technical analyst for CNBC-TV for seven years on the popular show Tech Talk, and has authored three best-selling books on the subject: Technical Analysis of the Financial Markets, Trading with Intermarket Analysis and The Visual Investor.
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