Divergence in Shanghai Composite.

Since Aug 19 low, Shanghai Composite has climbed a bit but this rise has not been confirmed by MACD resulting in a divergence. Hence, we need further evidence to be confident of a reversal in current (short term) down trend, or continuation of this trend to become intermediate or long term down trend.

Some Macroeconomic Data Points about Pakistan

From a recent WSJ article, here are some macroeconomic data points:

• On August 15 central bank reduced benchmark interest rate by 1% to 13%
• The previous reduction by 1% was done in April
• The rates were raised by 5% in 2008 to reign in inflation
• Inflation was 25.3% in August 2008, 19.1% in March 2009, and 11.2% in July 2009
• Economic growth was 2% in the previous fiscal year, and was average of 6% during previous 5 years
  
• Growth is expected to be 3.3% during the current fiscal year
• Fiscal deficit was 5.1% of GDP during last fiscal year, and 7.4% during the year before that
  
• Current-account deficit was $8.6 billion during last fiscal year, and $13.6 billion during the year before that
• Foreign-exchange reserves were $11.846 billion for the week ended August 8

Shanghai Composite near 50% retracement

From the October 2008 bottom, Shanghai Composite has climbed substantially. During this run, excluding the current one, there have been two retracements both close to 61.8%. The current retracement is close to the 50% mark. From MACD at the bottom, we can see that the current retracement is sharpest of the 3 during the past 52 weeks. Whether this retracement stops around 61.8% remains to be seen.