Best of the Week
Most Popular
1. US Housing Market Real Estate Crash The Next Shoe To Drop – Part II - Chris_Vermeulen
2.The Coronavirus Greatest Economic Depression in History? - Nadeem_Walayat
3.US Real Estate Housing Market Crash Is The Next Shoe To Drop - Chris_Vermeulen
4.Coronavirus Stock Market Trend Implications and AI Mega-trend Stocks Buying Levels - Nadeem_Walayat
5. Are Coronavirus Death Statistics Exaggerated? Worse than Seasonal Flu or Not?- Nadeem_Walayat
6.Coronavirus Stock Market Trend Implications, Global Recession and AI Stocks Buying Levels - Nadeem_Walayat
7.US Fourth Turning Accelerating Towards Debt Climax - James_Quinn
8.Dow Stock Market Trend Analysis and Forecast - Nadeem_Walayat
9.Britain's FAKE Coronavirus Death Statistics Exposed - Nadeem_Walayat
10.Commodity Markets Crash Catastrophe Charts - Rambus_Chartology
Last 7 days
Silver Price Trend Forecast Summer 2020 - 3rd Jul 20
Silver Market Is at a Critical Juncture - 3rd Jul 20
Gold Stocks Breakout Not Confirmed Yet - 3rd Jul 20
Coronavirus Strikes Back. But Force Is Strong With Gold - 3rd Jul 20
Stock Market Russell 2000 Gaps Present Real Targets - 3rd Jul 20
Johnson & Johnson (JNJ) Big Pharma Stock for Machine Learning Life Extension Investing - 2nd Jul 20
All Eyes on Markets to Get a Refreshed Outlook - 2nd Jul 20
The Darkening Clouds on the Stock Market S&P 500 Horizon - 2nd Jul 20
US Fourth Turning Reaches Boiling Point as America Bends its Knee - 2nd Jul 20
After 2nd Quarter Economic Carnage, the Quest for Philippine Recovery - 2nd Jul 20
Gold Completes Another Washout Rotation – Here We Go - 2nd Jul 20
Roosevelt 2.0 and ‘here, hold my beer' - 2nd Jul 20
U.S. Dollar: When Almost Everyone Is Bearish... - 1st Jul 20
Politicians Prepare New Money Drops as US Dollar Weakens - 1st Jul 20
Gold Stocks Still Undervalued - 1st Jul 20
High Premiums in Physical Gold Market: Scam or Supply Crisis? - 1st Jul 20
US Stock Markets Enter Parabolic Price Move - 1st Jul 20
In The Year 2025 If Fiat Currency Can Survive - 30th Jun 20
Gold Likes the IMF Predicting a Deeper Recession - 30th Jun 20
Silver Is Still Cheap For Now - 30th Jun 20
More Stock Market Selling Ahead - 30th Jun 20
Trending Ecommerce Sites in 2020 - 30th Jun 20
Stock Market S&P 500 Approaching the Precipice - 29th Jun 20
APPLE Tech Stock for Investing to Profit from the Machine Learning Mega trend - 29th Jun 20
Student / Gamer Custom System Build June 2020 Proving Impossible - Overclockers UK - 29th Jun 20
US Dollar with Ney and Gann Angles - 29th Jun 20
Europe's Banking Sector: When (and Why) the Rout Really Began - 29th Jun 20
Will People Accept Rampant Inflation? Hell, No! - 29th Jun 20
Gold & Silver Begin The Move To New All-Time Highs - 29th Jun 20
US Stock Market Enters Parabolic Price Move – Be Prepared - 29th Jun 20
Meet BlackRock, the New Great Vampire Squid - 28th Jun 20
Stock Market S&P 500 Approaching a Defining Moment - 28th Jun 20
U.S. Long Bond: Let's Review the "Upward Point of Exhaustion" - 27th Jun 20
Gold, Copper and Silver are Must-own Metals - 27th Jun 20
Why People Have Always Held Gold - 27th Jun 20
Crude Oil Price Meets Key Resistance - 27th Jun 20
INTEL x86 Chip Giant Stock Targets Artificial Intelligence and Quantum Computing for 2020's Growth - 25th Jun 20
Gold’s Long-term Turning Point is Here - 25th Jun 20
Hainan’s ASEAN Future and Dark Clouds Over Hong Kong - 25th Jun 20
Silver Price Trend Analysis - 24th Jun 20
A Stealth Stocks Double Dip or Bear Market Has Started - 24th Jun 20
Trillion-dollar US infrastructure plan will draw in plenty of metal - 24th Jun 20
WARNING: The U.S. Banking System ISN’T as Strong as Advertised - 24th Jun 20
All That Glitters When the World Jitters is Probably Gold - 24th Jun 20
Making Sense of Crude Oil Price Narrow Trading Range - 23rd Jun 20
Elon Musk Mocks Nikola Motors as “Dumb.” Is He Right? - 23rd Jun 20
MICROSOFT Transforming from PC Software to Cloud Services AI, Deep Learning Giant - 23rd Jun 20
Stock Market Decline Resumes - 22nd Jun 20
Excellent Silver Seasonal Buying Opportunity Lies Directly Ahead - 22nd Jun 20
Where is the US Dollar trend headed ? - 22nd Jun 20
Most Shoppers have Stopped Following Supermarket Arrows, is Coughing the New Racism? - 22nd Jun 20

Market Oracle FREE Newsletter

AI Stocks 2020-2035 15 Year Trend Forecast

Gold Volatile to $1500 But Chinese Stock Market SSEC to Outperform!

Stock-Markets / Chinese Stock Market Oct 19, 2010 - 04:15 AM GMT

By: Lorimer_Wilson

Stock-Markets

Best Financial Markets Analysis ArticleDr. Nu Yu writes: There has been a great deal of excitement about the recent performances of gold and silver with most analysts extremely optimistic regarding their potential. That being said technical analysis shows that gold is in for some very choppy seas ahead compared to the surging seas of the Chinese stock market. Perhaps today the refrain "Got Gold?" should be replaced with the words, "Buy Chinese Stocks!"


Gold in a Bull Market With a Bearish Basis for the Intermediate-Term
At this point with the gold price sitting at an all-time high it has developed two major patterns that should draw our attention.

1.  Ascending Broadening Wedge
The first pattern is a 7-year Ascending Broadening Wedge or megaphone formation confined by line A and line B. This pattern is similar to a rising wedge but with a broadening price pattern and it tends to appear in a bull market with a bearish bias. The most important feature of this pattern is that the swing amplitude between two boundaries becomes larger and larger, and price movement gets more and more volatile. This feature indicates that price sooner or later will have a downward swing to re-touch or re-test the lower boundary (line B), although the big upward swing generates a great attraction like fireworks.
 
Gold currently has a very broadening range between 900 and 1400. Once a downward swing happens, a drawdown could be very significant, with no mention of any potential downside breakout.
 
2. Rising Wedge
The second pattern is a 2-year Rising Wedge formation confined by line A and line C. This pattern also typically has a bearish bias but it can be realized only when a downside breakout happens at the lower boundary of the wedge. It looks like that two boundary lines of the current rising wedge on gold will merge at near the price of $1,500. It indicates there is a big potential for the price of gold to test the lower boundary line C of the rising wedge in the next three to six months before reaching $1,500.
 
A combination of an ascending broadening wedge and a rising wedge is a typical characteristic of a state of increased disequilibrium driven by overconfident market participants and is a sign of setting up a potential powerful volatility storm in the near future.
  
Shanghai Stock Exchange Composite Index Expected to Have a Fierce Advance Soon
Since the bearish Death Cross in the early part of this year (see chart below) the Shanghai Stock Exchange Composite Index (SSECI) has been depressed and has been in a downward channel for the last 14 months. However, a new uptrend should start after the bullish Golden Cross, which is defined by a successful breaking through both the 17-week moving average and the median line of the 14-month downtrend channel. Please note that my definition of the Golden Cross is different from the traditional Golden Cross of the 50-day and 200-day moving averages. 
 
Indeed, with the Golden Cross being confirmed on October 8th, the SSECI has surged 10% and is fast approaching the target level of 3,000 at the upper boundary of the 14-month downtrend channel which probably will not be able to resist a fierce advance.

 
Three Peaks and the Domed House
A special chart pattern, “Three Peaks and the Domed House“, is emerging from China’s SSECI. With my modified version of George Lindsay’s basic model (see below), the “Three Peaks and the Domed House” pattern can be divided into five major phases:
1) Three Peaks phase,
2) Basement phase,
3) First Floor phase,
4) Roof phase, and
5) Plunge phase.


This modified version, using “phase-counting”, is a macro approach to Lindsay’s basic model, and it is different from the classical micro approach using “number-counting” from 1 to 28. In the chart the SSECI is plotted as a red line against Lindsay’s idealized model in a black line.
 
From June of 2009 to April of 2010, the Shanghai index developed the “Three Peaks” phase. Then it had a sharp separating decline to reach the July 2010 low at 2320 and formed the “Basement” phase during this summer. Now it just started a rapid advance in order to build the “First Floor” of the Domed House.
 
Calibrated against Lindsay’s model:
a) the SSECI should reach the “First Floor” phase near 3300 with a 10% upward move from the present price by the end of this year
b) the target “Roof” phase of the Domed House is projected at 4200 for the SSECI by the middle of next year which represents an 81% upward measured move from the low of the “Basement” to the high of the “Roof”.
 
(Last week Market Vectors China ETF (PEK) was launched by Van Eck Global with the claim that it is the first and only U.S. listed ETF designed to give investors exposure to China’s A-Shares market. It would appear to be a very timely introduction!) 

Conclusion
There you have it! The ascent of the price of gold to $1,500 is going to be VERY volatile over the next few months while the Chinese stock market is about to take off in a major way. The choice is yours.

Dr. Nu Yu (fx5186.wordpress.com/), co-founder and president of Numarkan Investments and an affiliate of the Market Technician Association, is a frequent contributor to www.munKNEE.com

Visit http://www.FinancialArticleSummariesToday.com, “A site/sight for sore eyes and inquisitive minds”,  and www.munKNEE.com, “It’s all about MONEY”,  where you can sign up for their FREE weekly "Top 100 Stock Market, Asset Ratio & Economic Indicators in Review."  

© 2010 Copyright  Dr. Nu Yu - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules