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Is China’s bear market near its final throes just as the bull market elsewhere shows signs of topping?

The Shanghai Composite fell 2.3% Tuesday, taking back more than half of Monday’s 4.1% surge and helping set off the global retreat in equities that has the major U.S. indexes lower by upward of 2% at midday.

Following another round of tariffs between China and the U.S., the business community is pushing back. The WSJ’s Gerald F. Seib explains. Photo: AP

But a number of technical and fundamental factors suggest that China’s bear market—which has cut 27% from the Shanghai Composite since its recent peak on Jan. 24—may have nearly run its course. Not the least of those reasons is that Chinese authorities have stepped up their efforts to support the economy and financial markets.

China is in “Whatever It Takes” mode, according to Donald Straszheim, Evercore ISI’s main China watcher, an allusion to European Central Bank President Mario Draghi’s 2012 famous pledge to save the euro by any means necessary.

On Sunday, President Xi Jinping vowed to provide “unwavering” support for the private sector. Unlike the West, which has to deal with nettlesome democratic institutions, China can implement whatever measures its leadership deems necessary. Xi, of course, has effectively solidified his power as president for life, so his pledge can be counted on to be carried out.

Those include targeted micro measures, such as the People’s Bank of China directing 10 billion yuan ($1.4 billion) to China Bond Insurance Co. to provide credit support, the PBoC supporting bond financing, and an array of measures from the China Securities Regulatory Commission to prop up companies. In addition, the state-run Xinhua News Agency reported that a plan for income-tax cuts has been drafted.

Strategas Group’s technical strategy team writes in a research note that, notwithstanding Tuesday’s partial reversal of Monday’s rally, “we suspect the early part of a bottoming process is beginning to take shape here. This may include a lower low for stocks, but we’d expect some positive divergences to occur.”

Strategas’ message to China bears is if you have sold short, cover. (In a short sale, traders bet on a price decline by selling borrowed securities, which they hope to buy back at a lower price. Strategas’ recommendation is to repurchase those borrowed shares rather than hold out for further price declines.)

“Bottoming is a process, and we’re starting to see some evidence of reversals and lows taking shape,” they conclude.

Investors in exchange-traded funds have been moving back into China ETFs in the face of negative headlines on trade wars and tariffs, as well as slowing domestic growth, according to Bianco Research. Over the past three months, investors have poured $1.3 billion into China ETFs, while withdrawing $900 million from Brazil ETFs.

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While Asia Pacific economic indicators have been declining, those from Latin America have held up, according to Citigroup data cited by Bianco. “Similar instances of Asia Pacific underperformance…have been followed by improving economic data changes, while Latin America tends to stagnate. Inflows into China and ultimately the Asia Pacific [region] may be on the right side of this historical tendency,” the advisory concludes.

From a fundamental standpoint, while Beijing is making various moves to ease credit, the pace of global monetary tightening elsewhere actually is accelerating, according to Doug Ramsey, chief investment officer at Leuthold Group. This bearish liquidity trend has not been accompanied by “overheating” indicators typical at the end of cycles. Indeed, leading indicators of U.S. inflation have eased, Ramsey writes.

In sum, Beijing’s leadership now is pledging to do whatever it takes to support its stock market, which already has suffered a bear market owing to previous steps to reduce credit excesses and effects from the intensifying U.S.-China trade war.

In the U.S. markets, the old saying is “don’t fight the Fed.” There surely must be a Chinese translation of that.

Write to Randall W. Forsyth at randall.forsyth@barrons.com