Shanghai Stock Index

Shanghai stock market is approaching the critical 3000 level. The Shanghai market moved into “Bullish” phase since 10 Apr 09. There were corrections along the way up from 2444 to 2928. However corrections were shallow showing the strength of this rally.

No one knows exactly how far this rally will go but the bulls have the upper hand at this stage. Any pullback should see support at 2828 level, the previous pivot high.

The Trend Of Oil Price

The price of crude oil ended near the $70 mark per barrel. The price of oil is one of the determining factors that influence the movement of stock market. When the price is too high, the fear of inflation kicks in. When the price is too low, market participant infer that demand for oil is low which gives the perception the economy is slowing down.

Such is the love and hate relationship that market participant has with oil price.

Looking at the phase chart of USO (United State Oil ETF), the price of oil is facing the 200 day moving average resistance level. The price is sandwiched between the 200 day and 50 day moving average. It is still in “Recovery” phase.

If the price is able to bounce off from the 50 day moving average, it will be a sign that investors are betting on higher oil price in the coming months. Looking at the technical charts, oil price should have further upside.

STI

STI moved to "Bullish" phase on 29 May 09. The last time the index moved to "Bullish" stage is on Oct 07.

Analysts are still debating on whether this is a bull or bear market rally. But judging on the phase chart, it is clearly showing an uptrend.