China remains a worry; with housing price appreciation reaccelerating (and credit booming), policy is likely to remain restrictive rather than stimulative. However, amid an overall slowdown in growth, the needed transition from investment - and export-led growth to consumption - and service-oriented growth appears to be taking place. As the Wall Street Journal recently reported, Asia's middle class "is expected to grow by an average of more than 100 million people each year… By 2020, more than half of the world's middle class is expected to reside in Asia, compared with one-fourth in 2009." For example in China: "Sales of clothing and apparel are projected to exceed 800 billion yuan, or about $130 billion, by 2015, nearly doubling from 460 billion yuan in 2011, according to Boston Consulting Group." China's services sector appears poised to finally overtake its industrial sector, which are each about 45% of the economy (with the agricultural sector the remainder). As The Economist recently noted, "China's collars are turning white."

David Fuller's view China's efforts to rein-in property prices, while also shifting economic emphasis somewhat from export to consumer industries has created some uncertainty.

However, I do not think that this is a serious worry at today's historically cheap valuations for China. Technically, the Shanghai A-Shares Index (weekly & daily) shows a Type-2 bottom forming last December (as taught at The Chart Seminar), characterised by a sharp rally following a persistent decline. These patterns are followed by a right-hand extension phase over a number of months, before the base is completed by a sustained break above the initial rally high near 2560. Meanwhile, this Index has rallied over the last four sessions, indicating a potentially important loss of downside momentum. Therefore, a close beneath 2260 would now be required to indicate somewhat lower ranging before a recovery towards the February highs occurs. Completion of the base will indicate the establishment of an uptrend capable of supporting a cyclical bull market.