Of course since then the US markets have continued to push higher in an apparent show of outward strength which, at the very least, killed EWI's 4th wave model completely (despite the rally happening on falling volume). Regular readers will agree that I have been questioning the wisdom of that 4th wave model for some time now but, also as expected, EWI stuck with it tenaciously until there was no other choice but to drop it under the EW rules. This is academia 101. It's not a bad thing but it is a thing. Avi on the other hand has been more open to a higher rally before a B wave peak (B of 4) and perhaps even opening the door to another wave up to S+P 2300 (meaning the big recent pullback was the entire 4th wave, now going into 5 of 3 or 5 of 3 of 3).
The reason I mention this is that while markets trade out of step and to different degrees, it will be difficult for China to completely collapse and then for the US to decouple from this. As the US markets pushed higher, the FXI pushed higher too but importantly it was only able to modify instead of breaking the rising wedge model that I have been working off of and sharing via this blog. While the FXI rally has not necessarily ended at this point, it has certainly arrived at one of the logical herd reversal points which is a 5 wave rail bump move into the 38.2 fib and the level of the prior 4th. I think that if China has another big wave down as expected that the US will also see a very big decline. It is actually my primary model that this will happen and the two main reasons for this are the FXI count and the BKX count. BKX in particular is not going lower without the DJIA and S+P and $COMPX in tow. Of this we can be assured. So do keep an eye on BKX as well as FXI.
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