Like Barry, I do watch the Hong Kong market as an important "tell" to China and the Chinese economy. But there are other important indicators for China and for investor risk aversion. For instance, while the Hang Seng Index has been taking a tumble after their markets returned to work after the Lunar New Year, the Shanghai Composite has rallied in the same timeframe.
Commodity prices, which are canaries in the coal mine of global growth and inflationary expectations, remain in an uptrend.
Other measures of risk aversion, such as the ratio of US Consumer Discretionary stocks (XLY) to Consumer Staples (XLP) is looking bullish.
The ratio of the Morgan Stanley Cyclical Index to the market, another indicator of growth expectations, is testing a level of relative resistance but remains in a relative uptrend.
If the Hang Seng were to break down, it is not necessarily a Sign of the Apocalypse but perhaps an indication of a minor pullback. Until we get a bearish consensus on these other indicators of investor risk aversion, I would be inclined to give the bulls the benefit of the doubt in the intermediate term.