Chinese Stocks Turn Lower on Rate Hike

11/16/2010 10:16 am EST

Focus: STRATEGIES

Thomas Aspray

, Professional Trader & Analyst

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The Korean interest rate hike, designed to help curb inflation, put the focus on China as inflation there reached a 25-month high last week. This hit stocks hard as the Shanghai Composite Index dropped 4%, which is very likely to impact the US opening. This index had reached both its long-term downtrend line as well as the resistance from the April 2010 highs. Volume was strong on the rally from the summer’s lows as the on-balance volume (OBV) has been stronger than prices, surpassing the 2009 highs. This suggests that despite the decline, the intermediate-term trend is positive.

Tom Aspray, professional trader and analyst, serves as video content editor for MoneyShow.com. The views expressed here are his own.

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