Is what happens in China important to the rest of the world? I would guess a few would say 'yes'. What about stock-market performance? Is China important to the S&P 500 and other global markets? Again, I think a few would say 'yes'.
Over the past 5 years, the Shanghai Composite index and the S&P 500 have been heading in different directions to say the least. The Shanghai index finds itself worth almost a third less than it was 5 years ago while the S&P 500 is up nearly 100%. Needless to say, that's one of the largest performance-spread differences in years.
At this time, the Shanghai index is facing dual resistance at (1) in the chart above with momentum at lofty levels -- actually the highest since its 2009 highs.
If the Shanghai Index breaks above that resistance, it should be considered a positive breakout, which could become a positive global influence.
And the Shanghai index isn't the only index up against multi-year resistance: check out the price situation in Japan right now (see here).
Is it worth keeping a close eye on the Shanghai and Nikkei 225 as an indicator as to where other global stock markets are headed?
Absolutely.