The house of BRIC is crumbling

Shanghai's SSEC is the last stock market in a BRIC economy to be still standing. BRIC-- the acronym given by Goldman Sachs in 2001 to the fast-growing developing economies of Brazil, Russia, India & China-- is the mighty little red caboose that the world is pinning the hope of restarting the stalled global economy, in place of the derailed locomotive of the developed economies of US, Europe and Japan. However there are signs that the strain is to much for the BRIC economies to handle. Except for Shanghai's SSEC, all the stock markets of the other BRIC economies have entered into correction. See Chart 1 & 2 below,


Chart 1: SSEC & RTSI's daily chart as at July 10, 2009 (Source: Stockcharts.com)


Chart 2: BSE & BVSP's daily chart as at July 10, 2009 (Source: Stockcharts.com)

How much longer can SSEC power on? It has broken above the strong horizontal line resistance of 3000 in early July. In the past few days, its rise has been capped at 3140-50. Its next strong horizontal line resistance is at 3750-3800. See Chart 3 below.


Chart 3: SSEC's weekly chart as at July 10, 2009 (Source: Stockcharts.com)

A correction may start for SSEC, if one of the following occurred:
1) a drop in the SSEC index below the psychological support of 3000; or
2) a drop in the SSEC index below the 20-day SMA line (presently at 2970); or
2) the MACD or RSI indicator breaking below their respective uptrend line (black line). See Chart 4 below.


Chart 4: SSEC's daily chart as at July 10, 2009 (Source: Stockcharts.com)

If SSEC were to enter into a correction, the current cautious selldown in the emerging equity market could take a turn for the worst.