Wanton Noodles in New York: HSI & SPX

(Courtesy: Sparklette.net)

When in need of a fresh perspective of your city, a stroll towards a little known part of town might help. How about Wanton Noodles(above), a popular Hong Kong dish in China Town, New York?

Here's another very interesting blue(HSI) and red(SPX) noodle dish you might enjoy:

Often times, a HSI-SPX divergence provides a good hint of a short-term reversal in trend. Have a look at the past instances, and the highlighted area. Combine this with the relatively high bullish sentiment, and this DJIA chart from a previous post. What do you think is on offer next for the SPX?

Hang Seng Index: Breaks Shoulder Line

Last post on the HSI warned of a possible Head & Shoulders pattern. After a false breakdown, HSI broke above the "shoulder" line in the last session on decent volume. This negates the H&S as explained in the previous post (same applies to STI), and sets up short-term bullish possibilities. However, in the very short-term, stiff resistance exists at 23900, and expect a pullback anytime to test the breakout. A break above this level may re-test recent rally highs.

In the medium-term, am looking for HSI to stay in range (no new rally highs), due to a correlation factor with US indices. I will explain this better in the next few posts.

Meanwhile, SSEC is testing downtrendline resistance, after successfully bouncing above 2700. Will be posting an update within the next few days.

NEW YEAR QUESTION: Why did we bounce on the HSI?

While the fundamental folks are busy coming up with "explanations" for the recent bounce (Chinese factory numbers, commodity prices, ben bernanke's haircut, solar flares, etc etc), here's the real reason for the bounce. Have a look at the weekly HSI chart:

Price simply hit the Uptrendline! Watch that line my friends ;)

(Video) Prechter on CNBC: "Not a bear among them"