The Shanghai Composite index fell again last night, closing at a new 3.5 year low. This is as the S&P 500 continues to trade near multi-year highs.
Jeff Gundlach, among others, considers the Shanghai Composite to be a leading indicator of the S&P 500. As such, he likes the idea of shorting the U.S. and going long China.
Meanwhile, Citi’s Tobias Levkovich has argued that correlation was temporary and has since broken down.
Regardless, the Shanghai Composite might be the ugliest chart of the year. Earlier this morning, the index briefly dipped below 2,000 and went as low 1999.48.