China and Japan set to fall

Whilst the US equity market closed significantly lower, there is increasing likelihood that both the Chinese and Japanese markets will similarly follow. As ever, what will be particularly interesting is how the Chinese leadership will react to another sig' down wave.


China, daily

Japan,  monthly

Summary

*Japan is closed until Thursday.
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Suffice to add.. the Chinese market faces stiff resistance around 3300... and I sure don't expect any sustained price action above there. Indeed, considering the renewed weakness in the EU/US markets.. the China market will be increasingly vulnerable for the rest of this month.
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re: Japan... near term viable downside to 16500.... best 'bearish case' by mid Oct' would be around 14000.

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Looking ahead

Wed' will see PMI manu', and the latest EIA oil report.

*Fed official Lockhart is due to speak at 12.30pm.
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Positioned for downside

For yours truly, it was a mixed day. The market broke lower - not as expected,although the Trans' sure was warning of trouble since last Friday. So... it was a case of 'chase it lower.. or at the very least.. don't take any longs'.

sp'weekly8b

A hit of sp'1900 in the near term looks relatively easy. Things will obviously get more tricky when testing the double floor of 1867. However, a test of the Oct'2014 low of 1820 looks viable by end of next week. Whether we can somehow unravel to the mid/low 1700s... very difficult to guess.

Regardless of how we trade overnight/open tomorrow, the window of opportunity is wide open for the equity bears. I'm certainly going to try to remain broadly short into early Oct'.

Goodnight from London