China’s biggest stock rally in more than two years has US stocks looking to open higher, and the real strength is in the Nasdaq, where futures are indicating a gain of 0.7%.  Economic data is relatively light today, and while there hasn’t been much in the way of earnings reports yet today, the pace will really pick up in the days ahead.

The big gain for Chinese equities overnight is definitely a welcome bullish move from an area of the world that currently keeps investors up at night, but looking back over the last ten years, we would note that 4% moves in Chinese equities haven’t typically come during periods of market strength.  The red dots in the chart below show all occurrences of one-day moves of 4% or more for the Shanghai Composite since the start of 2008.  While there were exceptions, most of the 32 prior instances came during the downward moves in 2008 and then in 2015.

Start a two-week free trial to Bespoke Premium to see today’s full Morning Lineup report. You’ll receive it in your inbox each morning an hour before the open to get your trading day started.