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Thursday, November 29, 2012


What exactly is going on in China?  Check out these charts of the Shanghai exchange.

Lets start back at the beginning of the current bull market in the spring of 2009.  We can see this index made a higher low while western markets were still going down.  However, this index peaked way back in late 2009.  It just made new lows since that peak today.  Lets zoom in to the daily chart.

The circled bar was when the Chinese government announced a new stimulus plan.  The market tested that high, but eventually failed and is now making multi year lows.  I keep hearing people on TV telling me that the Chinese economy is turning the corner and starting to pick up again.  Really.  Does this look like a stock market from a healthy and growing economy.  The stocks on this index have limited participation from foreigners.  The majority of the money is from the Chinese people themselves.  To me that is feet on the ground there voting with their wallets.  I have stated that the current bump in the Chinese economic data may be caused by new Apple products and might not be sustained when production of those new products flattens out.  I think this chart may be indicating that idea could be correct.  The Chinese economy has gotten so big that what happens in China does not stay in China anymore.  Maybe their economy is not done slowing down yet.  I would think this index would bottom and be going up at least some by the time the economic data really showed strength.  This could still form some kind of bottom here if this latest break down turns out to be a fake out.  If not, it could be indicating more slowing of the global economy is coming.


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