In its last two trading sessions the Shanghai Composite has shed 140 and 160 bps, respectively.
At the same time the index sits on trend-line (1) support dating back to 2006 within the context of a broader pennant/flag consolidation pattern formed between lines (1) and (2).
Over the past two summers the SSEC has formed similar, yet smaller flag patterns. Break-downs from such patterns have caused and/or coincided with material downside in the SPX, as shown at the inset.
To the extent that history holds and that this flag pattern has been developing for six years(!) not six months, any break-down here would likely have a more materially negative effect on the outlook for global growth, equity and commodity prices.
Pay attention to what the SSEC does at line (1) as it likely has implications for every other asset class given the importance of this country being the marginal driver of global growth over the past decade.