Mr. Zhao said that if China keeps running a trade surplus, which amounted to $22.3 billion in June based on the latest official data, it would have little choice but to keep buying U.S. Treasurys.
via S&P Downgrade of U.S. Puts Pressure on China to Spur Domestic Consumption – WSJ.com.
…….. or remove the peg to the US dollar. Either action would be painful. (CT)
The Shanghai Composite Index followed through below 2620 Monday, after breaking primary support at 2650 Friday, to confirm a primary down-trend. The index fell to 2500 before recovering weakly to 2527 by the close. HongKong fared slightly better, with the Hang Seng Index initially falling to 20000 but recovering to test 20500 by the close. Target for the down-swing is the 2010 low of 19000*.
* Target calculation: 22000 – ( 25000 – 22000 ) = 19000
Similarly, the Dow Jones HongKong Index broke support at 445 to signal a primary down-trend. Target for the down-swing is the 2010 low of 365.
* Target calculation: 445 – ( 510 – 445 ) = 380
Posted August 3, 2011 8:00 p.m. ET (10:00 a.m. AET) on Trading Diary.
The Shanghai Composite Index is testing primary support at 2650 on the weekly chart. Follow-through below 2600 would confirm a primary down-trend. Declining 13-week Twiggs Money Flow again warns of selling pressure.
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