China has become critical factor in the global equity markets in the 21st century.

Today we look at the ETF FXI for China’s stock market and show how U.S. investors have received several timely bullish and bearish signals over the past decade-plus (when comparing FXI with the S&P 500 – SPY).

In today’s chart 2-pack, you can see how the S&P 500 has been in an uptrend since the 2009 low while the China ETF FXI has traded sideways. Each time $FXI has bumped into resistance at line (1) it has formed a bearish reversal (marking a short-term peak).

More importantly, those reversals have been canaries in the coal mine for US investors… marking a trading top for the S&P 500 each time as well.

FXI is currently testing 11-year resistance at (2), where it is attempting to create the largest bearish reversal since the 2007 highs. And this is occurring as the S&P 500 tests channel resistance.

If FXI breaks down through its uptrend support line at (3), it would send a negative message to the S&P 500.

What would stock bulls in the states and China love to see? An upside breakout of 12-year resistance!!!

(Click on image to enlarge)