China markets signaling a strong rally ahead

The Hang Seng China Enterprise Index made а Golden Cross / SMA50 cross over the SMA200 /, which is a positive signal for investors to expect new stock market rally.

The question in front of traders and investors is now: How far will the Chinese leaders reach to prevent the formation of a bubble in the stock market?

Traders are driving the market of every word from Beijing for clues about how the government may want to manage this year's economic slowdown on a global scale. The new chairman of the securities regulator - who played a leading role in instigating risky appetite - just downplayed the importance of last week's rating downgrade, calling it "very normal," although the market reaction showed another. State media came in, saying there was no need to worry about margin trading. This is after the brokerage firms have been instructed to minimize these many risks.

The result is that China's most speculative stocks continue to fly between huge profits and losses while the daily turnover reached 1 trillion yuan ($ 149 billion) this month. ChiNext's profit on Friday rose for the sixth consecutive week, the longest series since 2015.

Much of the worries of global investors were related to the slowdown in China's economy, with the most leading indicator being the stock market. So after this positive signal we can expect the rally from the beginning of the year on the global stock markets to continue.

Source: Bloomberg Finance L.P.

Chart: Used with permission of Bloomberg Finance L.P.

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