Saturday, April 4, 2026 
Tops In China and Interest Rates
On August 4th, the Shanghai Composite Index printed a high of 3651. It has sold off abruptly since then. So far today, the index is off 5% at 2853. The decline is being led by oil and gas shares as well as basic materials.
China stocks bottomed before US stocks.
Shanghai Composite and S&P 500
Coupled with the Shanghai Composite Index, rates on US bonds also bottomed before US stocks.
Ten Year Rates and S&P 500
Both Shanghai and rates were leading indicators of a bottom in stocks, which begs the question: Is the top in US stocks being signalled by the same things that flagged the bottom?
If risk aversion suddenly becomes en vogue, the exits will be crowded. Buyers have bid up the market in an orderly fashion. Sellers are never as orderly.
Downside insurance remains cheap and undervalued.
