Aside from being on the wrong side of the market with my current S&P500 index short trade, there are several other things that have me puzzled about the market's ascent. One of these conundrums is the i-Shares FTSE Xinshua/ China 25 (symbol: FXI).

We last looked at FXI on January 27, 2010, and we identified the $42 level as resistance, and as you can see from figure 1, a weekly chart of FXI, this area remains resistance. Several reasons why this chart should be troubling for equity bulls: 1) FXI has not made new highs while the US indices have; 2) China led the markets out of recovery finding a bottom in October, 2008, which was several months before the US found its footing, so could China (and by proxy FXI) be leading the markets lower?

Figure 1. FXI/ weekly

I know stocks only go in one direction, but some former Indian chiefs (i.e., the FXI) are not cooperating.

By Guy Lerner

http://thetechnicaltakedotcom.blogspot.com/

Guy M. Lerner, MD is the founder of ARL Advisers, LLC and managing partner of ARL Investment Partners, L.P. Dr. Lerner utilizes a research driven approach to determine those factors which lead to sustainable moves in the markets. He has developed many proprietary tools and trading models in his quest to outperform. Over the past four years, Lerner has shared his innovative approach with the readers of RealMoney.com and TheStreet.com as a featured columnist. He has been a regular guest on the Money Man Radio Show, DEX-TV, routinely published in the some of the most widely-read financial publications and has been a marquee speaker at financial seminars around the world.

© 2010 Copyright Guy Lerner - All Rights Reserved
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