In a broad global recovery, China stands out

Last week, we saw that there has been a remarkable thrust in breadth among global markets.

But not everyone is participating. Appetite for trading in China has wanted, as Bloomberg recently noted. The lack of enthusiasm is even more pronounced among those trading on margin. Turnover in margin accounts over the past month has sunk dramatically.

It's not hard to see why. The average stock in that market has been declining for months, even if some of the major Chinese indexes have held up despite that deterioration. The Cumulative Advance/Decline Line for the Shanghai Composite is challenging its 5-year low.

This activity has pushed the McClellan Summation Index for the Shanghai below zero...and kept it there. This is exactly the opposite of what we see in a healthy market environment.

That's also evident in the percentage of those stocks holding above their 200-day moving averages. In a healthy market or sector, we typically see this figure hold above 60%, with forays below 40% bringing in interest among buyers. In an unhealthy market, this figure typically holds below 40%, with moves above 60% generating selling pressure.

We use the same general guidelines on a medium-term basis, with the percentage of stocks above their 50-day average. And that, too, shows unhealthy behavior, as fewer than 60% of stocks have been holding above their averages. That's not what we see during robust markets.

If we focus on larger-cap stocks in that market, represented by the FXI fund in the U.S., then it's a similar message. The Optimism Index plunged below 40 and has only grudgingly rebounded, with prices meandering.

In strong uptrends, when sentiment drops into pessimistic territory, there's usually more of a "spiky" rebound as buyers sense an opportunity.

Other measures never really showed much pessimism anyway over the past month. Traders were still moving money into the fund, not out of it.

On social media, twitter users have tweeted twice as many bullish messages about the fund than bearish messages. This is calculated like a put/call ratio, so a low reading below 1.0 means that there are more bullish than bearish messages.

This is coming just as FXI is entering what has traditionally been a choppy seasonal window into the summer months.

None of this is especially damning evidence for buyers, but there isn't much here to suggest it's a great opportunity. Chinese stocks have been showing poor participation, and buyers have not been eager like they are in healthier market environments. Many stocks are lagging, and it's not like we're seeing overwhelming displays of pessimism that might hint at a contrarian opportunity.

This market needs to see much more of a give-up attitude among investors, or much better internal participation, before potential reward would seem to outweigh the risk.