Shanghai Index nearing major low

by Gary Glover 27 May 2014

Everyone is incredibly bearish about the Chinese economy and its stockmarket.  From my experience this is often when markets find their lows, when everyone turns typically uniformly bearish.  The stockmarket is generally 6 months ahead of the economy so we could be getting close to a bottom in the Shanghai Index based on sentiment alone.
Technically this is an overlapping decline, a descending wedge pattern and these are normally incredibly bullish patterns longer term.  The risk here is probably time rather than price as price could remain weak for a bit longer in time.  
The Nikkei made a similar pattern back in late 2012 and went on to almost double in price  within 18 months of the low.  Almost every broking house is very negative China and Chinese Equities so we could be very close to a major low.  

Disclaimer

Gary Glover is an Authorised Representative (Rep No. 259215) of Novus Capital Limited ("Novus"). Novus is a holder of Australian Financial Services Licence No 238 168. Novus, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this page or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.
 

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