Broad market(both S&P large caps and IWM small caps) conditions improving rapidly

Many posts ago on June 17th with this post Broad Market Status Quo, I said that it would take a move up in the broad market on increased volume, coupled with a move higher in the DAX as well as the Shanghai Composite to negate my bearish view. Well the broad market has increased its upside volume on this advance, and the DAX as represented by the chart immediately below recovered not only its 200day moving average below 6400 but above its 100day moving average yesterday above 6600...quite impressive Ms. Merkel!  But the one laggard remains to be China, as shown in the lower chart.

The one improving aspect of the Shanghai Composite is the structure of the recent candles. As you can see in the green circle on the right, yesterdays hammer is very encouraging, especially since it came after a long downtrend and some constructive bottoming action. Actually, the recent action looks very similar to the green circled area on the left from late last year/early this year which saw 2 hammers with the second hammer also being a bullish engulfing. So although China still remains in a downtrend, a risky countertrend trade could be finding some buyers at these levels...so watch Chinese stocks here (names like BIDU, SINA, SOHU, etc). The Shanghai Composite really needs to make a higher high to get out of its funk and reverse the downtrend but risky traders may want to take a shot on the long side here using a tight (new lower low) as a stop.

Anyway, encouraging signs here in the US as well as with the leader in Europe (DAX) are suggesting we may be in the midst of a summer rally. There are many bulls out there hoping this is the case. But with some big name stocks such as IBM, INTC (yes tech has been the laggard sector I know) as well as some other heavy weights below their respective 200day moving averages, I just need one more piece of the puzzle to become a firm believer in a melt-up rally to 1400+ myself. Ni hou Shanghai!