U.S. equity markets sold off sharply early in the trading session because of a 6.7% decline in China’s Shanghai Index. The Chinese stock market is once again down over 20% from the top. Classical chartist’s are calling this a new bear market. U.S. investors are trying to figure out if China is the leader or if the U.S. will continue to move higher without China.
Technically the September E-mini S&P 500 turned the main trend to down on the daily chart when the market crossed 1014.75. Buyers did come in under this price to produce a modest recovery into the close. The current pattern suggests a rally to 1025.00 is likely. If resistance is formed in this area, then look for a further decline to 1007.25.
Volume in the stock market was light because of next week’s holiday and Friday’s U.S. Non-Farm Payrolls Report.