Chinese Canary

The Hang Seng H-Shares Index is a good indicator for worldwide interest in Chinese shares.  I don't like to use the Shanghai Index because it is closed to foreign investors.  In the 2008-2009 bear market, the H-shares index bottomed before the SPX did, bottoming in October instead of March.  I like to look at it as a leading indicator for risk taking.  What you have is lower highs from middle of November, a negative divergence against the SPX. 

Despite the positive sentiment in emerging markets and China, the H-Shares have lagged the SPX.  What seems to be happening is that positive sentiment which caught on more quickly in China shares is finally catching up to the SPX, boosting it higher relative to China. This is more of a big picture theme, so it will play out over months, not days.  But it is a warning sign that the rally is very mature.

For today's trade, I am slightly positive but hold no position.