In this edition of the MTA Chart of the Week, Jeffery E. Lay, CMT studies the correlation between the Chinese Xinhua 25 and Dow Transportations indices.
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For months, perhaps bordering on years, the investing community has been abuzz with the growth of the Chinese markets. Aside from the advance, is this once emerging market giving us clues as to the future of markets worldwide?
The top chart above plots a 1 x 3 point and figure chart of the iShares FTSE/Xinhua China 25 Index. Red dashed horizontal lines denote resistance levels from previous consolidation areas. The most significant recent up and down trend lines are also plotted. The bottom chart is a percent change chart, contrasting the Chinese ETF (in red) and the Dow Transportations (in black). A black dashed vertical line marks the Oct 07 swing high in China, and red crosshairs plot the Mar 09 pivot low in the Transportations. Black dashed horizontal lines denote resistance
