Sat 30 Jan 2010
Chinese stocks break down
Posted by Prieur du Plessis under China, Investment
[2] Comments
The Chinese Shanghai Composite Index – the index that led the turnaround in global stock markets by five months – seems to be in trouble. The Index has just become the first major index to breach its key 200-day moving average, often seen as an indicator of the primary trend. In order to guard against whipsawing one would have to wait a few days for the break to be confirmed.
Source: StockCharts.com
Whether this cycle will be characterized by China having led both bottom and top turning points will become clear in due course, but a study of previous declines in the Shanghai Index makes for interesting reading. According to US Global Investors – Weekly Investor Alert, in early 2004 and early 2007, when tightening fears haunted investors in a policy environment similar to the current one, Chinese stocks underwent a sharp selloff for a couple of months and yet finished the year higher as investors realized the economy was not headed for a hard landing (see charts below). This would seem to suggest that the stock market correction in China could present buying opportunities in the medium term.
Source: US Global Investors – Weekly Investor Alert, January 29, 2010.
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- Pingback from Humble Money » Blog Archive » links for 2010-01-31
February 1st, 2010 at 6:02 am[...] Chinese stocks break down » Investment Postcards from Cape Town Everything in Australia seems to be a derivative of what happens in China and elsewhere. Posted by Andrew Filed in Links [...]
- Pingback from Monday Morning chartology-A look at the Dollar - Steve Cook on Disciplined Investing - InvestorsInsight.com | Financial Intelligence, Advice & Research / Investment Strategies & Planning for Individual Investors.
February 1st, 2010 at 3:23 pm[...] Technical Chinese stocks breaking down (chart): http://www.investmentpostcards.com/2010/01/30/chinese-stocks-break-down/?utm_source=feedburner&u… The ‘January indicator’ and the ‘December low indicator’ [...]




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