The reason why I watch the Hang Seng? Because it is very heavy China stocks and it is very heavy financials. Both China and Financials were the benefactors of early speculative money during the crisis, and I have a feeling that money will be leaving these two first as well.
I am somewhat agnostic on China. There is a lack of transparency. By many accounts there are many conflicting bullish and bearish developments. But I am no China expert. hhasia is and she is very bullish on China.
However, I am **extremely** bearish on financials. And even if the China side of the equation is still strong, the financials side of the equation will bode trouble for the HSI.
Here are my charts, and they are not bullish. My $0.02.

