One of the pillars of risk appetite globally has been the rally we have seen in equity markets around the world the last year. The Shanghai composite’s chart if a great representation of a strong rally since spring of last year. last week and today the composite is testing an ascending trend line near the 3500 level after coming off 52 week highs a couple weeks back with a divergent daily RSI reading. There is a “support zone” at the 50% retracement at 3462 and slightly below at 3442 which bulls should be watching carefully. The risk is a break of this trend line and the 50% retracement could lead to a deeper pullback towards the 200dma near 3300 and could put some pressure on other global market indices.