Upside Acceleration for Shanghai

The Shanghai Composite Index rocketed to new post-July highs today, which should continue to benefit names likes Arch Coal (ACI), Walter Energy (WLT), and Freeport-McMoRan Copper & Gold (FCX).

After consolidating for four sessions right around its August 2009-October 2010 down trendline, today the Shanghai index accelerated to the upside to 3,051 in what looks like the start of a new upleg that could be heading for a test of its April high at 3182, or another +4.3%.

Meanwhile, the SPX hit a new post- July high today at 1196, possibly on the way to a test of its Apr. high, up 2.5% from current levels. At this juncture, only a decline that breaks 2,950 will argue that the Sept. 20th upleg in the Shanghai is complete. Finally, let's also notice that RSI for neither index has confirmed today's new highs, which is a warning signal that the Jul-Oct upmove likely is getting a bit long-winded.