Check for Pee-Pee in Your Coke, Jim Chanos!

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To update my ongoing series about the Shanghai Composite and the noted China bears (Chanos, Hugh Hendry, etc.), here we have an updated daily chart of the Shanghai. The inverted head and shoulders bottom from last summer was confirmed and even went beyond the measured move higher, before pulling back since November. Essentially, this pullback amounted to a retest/gap fill down to the neckline of that head and shoulders pattern.

As we can see now, the retest looks to have held. In other words, those China bears pining for a deflationary collapse are going to have to bide their time for the foreseeable future, as the presumption is that the uptrend will now resume, especially if the bulls can recapture and hold 2,950.

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