Best of the Week
Most Popular
1. The Trump Stock Market Trap May Be Triggered - Barry_M_Ferguson
2.Why are Central Banks Buying Gold and Dumping Dollars? - Richard_Mills
3.US China War - Thucydides Trap and gold - Richard_Mills
4.Gold Price Trend Forcast to End September 2019 - Nadeem_Walayat
5.Money Saving Kids Gardening Growing Giant Sunflowers Summer Fun - Anika_Walayat
6.US Dollar Breakdown Begins, Gold Price to Bolt Higher - Jim_Willie_CB
7.INTEL (INTC) Stock Investing to Profit From AI Machine Learning Boom - Nadeem_Walayat
8.Will Google AI Kill Us? Man vs Machine Intelligence - N_Walayat
9.US Prepares for Currency War with China - Richard_Mills
10.Gold Price Epochal Breakout Will Not Be Negated by a Correction - Clive Maund
Last 7 days
The Best “Pick-and-Shovel” Play for the Online Grocery Boom - 18th July 19
Is the Stock Market Rally Floating on Thin Air? - 18th July 19
Biotech Stocks With Near Term Catalysts - 18th July 19
SPX Consolidating, GBP and CAD Could be in Focus - 18th July 19
UK House Building and Population Growth Analysis - 17th July 19
Financial Crisis Stocks Bear Market Is Scary Close - 17th July 19
Want to See What's Next for the US Economy? Try This. - 17th July 19
What to do if You Blow the Trading Account - 17th July 19
Bitcoin Is Far Too Risky for Most Investors - 17th July 19
Core Inflation Rises but Fed Is Going to Cut Rates. Will Gold Gain? - 17th July 19
Boost your Trading Results - FREE eBook - 17th July 19
This Needs To Happen Before Silver Really Takes Off - 17th July 19
NASDAQ Should Reach 8031 Before Topping - 17th July 19
US Housing Market Real Terms BUY / SELL Indicator - 16th July 19
Could Trump Really Win the 2020 US Presidential Election? - 16th July 19
Gold Stocks Forming Bullish Consolidation - 16th July 19
Will Fed Easing Turn Out Like 1995 or 2007? - 16th July 19
Red Rock Entertainment Investments: Around the world in a day with Supreme Jets - 16th July 19
Silver Has Already Gone from Weak to Strong Hands - 15th July 19
Top Equity Mutual Funds That Offer Best Returns - 15th July 19
Gold’s Breakout And The US Dollar - 15th July 19
Financial Markets, Iran, U.S. Global Hegemony - 15th July 19
U.S Bond Yields Point to a 40% Rise in SPX - 15th July 19
Corporate Earnings may Surprise the Stock Market – Watch Out! - 15th July 19
Stock Market Interest Rate Cut Prevails - 15th July 19
Dow Stock Market Trend Forecast Current State July 2019 Video - 15th July 19
Why Summer is the Best Time to be in the Entertainment Industry - 15th July 19
Mid-August Is A Critical Turning Point For US Stocks - 14th July 19
Fed’s Recessionary Indicators and Gold - 14th July 19
The Problem with Keynesian Economics - 14th July 19
Stocks Market Investors Worried About the Fed? Don't Be -- Here's Why - 13th July 19
Could Gold Launch Into A Parabolic Upside Rally? - 13th July 19
Stock Market SPX and Dow in BREAKOUT but this is the worrying part - 13th July 19
Key Stage 2 SATS Tests Results Grades and Scores GDS, EXS, WTS Explained - 13th July 19
INTEL Stock Investing in Qubits and AI Neural Network Processors - Video - 12th July 19
Gold Price Selloff Risk High - 12th July 19
State of the US Economy as Laffer Gets Laughable - 12th July 19
Dow Stock Market Trend Forecast Current State - 12th July 19
Stock Market Major Index Top In 3 to 5 Weeks? - 11th July 19
Platinum Price vs Gold Price - 11th July 19
What This Centi-Billionaire Fashion Magnate Can Teach You About Investing - 11th July 19
Stock Market Fundamentals are Weakening: 3000 on SPX Means Nothing - 11th July 19
This Tobacco Stock Is a Big Winner from E-Cigarette Bans - 11th July 19
Investing in Life Extending Pharma Stocks - 11th July 19
How to Pay for It All: An Option the Presidential Candidates Missed - 11th July 19
Mining Stocks Flash Powerful Signal for Gold and Silver Markets - 11th July 19
5 Surefire Ways to Get More Viewers for Your Video Series - 11th July 19

Market Oracle FREE Newsletter

Top AI Stocks Investing to Profit from the Machine Intelligence Mega-trend

China's Stock Market Rollercoaster Ride Continues

Stock-Markets / Chinese Stock Market Jul 03, 2015 - 10:35 AM GMT

By: EWI

Stock-Markets


But There is a way to endure the wild ride -- with Elliott wave analysis

"Chao gu" is the Chinese term for speculating in stocks. Roughly translated, it means "stir-frying" shares. Lately, though, for millions of Chinese investors, it means getting fried.


Enter the "nerve-shredding," "whiplash-inducing," rollercoaster "tantrum" of China's stock market. After soaring to 7-year highs on June 12, both the Shanghai Composite and Shenzhen stock indexes collapsed in a respective 21% and 25% sell-off (as of June 30), frequently marked by wrenching intraday swings the likes of which haven't been seen in 20 years.

In the words of one June 28 news source (bold added):

"You have to have a very strong stomach to trade in China. You have to be prepared for days when you are up or down more than 5% and there is no clear fundamental explanation." (FinanceAsia)

In fact, not only isn't there a bearish fundamental explanation for the market rout, but those fundamentals widely seen as bullish for stocks have also failed to stem the slide. Take, for instance, these recent stock-boosting initiatives on the part of the People's Bank of China:

  • A .25% cut to both its 1-year lending and deposit rates
  • A decrease in banks' reserve requirements to loosen the lending spigot
  • The first-ever approval of local government pensions to buy stocks

That China's stock market shrugged off these (and other) supposedly bullish catalysts hasn't gone unnoticed. In the words of one Chinese investor, these moves imply "the stock market is kidnapping the government." (The Globe & Mail, June 30)

Well, he's sort of right. The moves imply the government is not in control of the market. Actually, on June 5, our own Asian-Pacific Financial Forecast expressed this exact sentiment and wrote:

"China's current bull market is not a product of government stimulus or of investor ignorance or -- as a prominent short-seller told CNBC this week -- 'the largest pump-and-dump in history.' "(Bloomberg, 6/1/15).

So, what is it a product of? Well, our Asian-Pacific Financial Forecast provides this Elliott wave explanation:

"Actually, it's the initial wave within China's wave V up, which followed the end of its wave IV contracting triangle."

In other words, Chinese stocks have been in a bullish Elliott wave formation, but those don't develop in a straight line; you should expect pullbacks, whether or not there is a good "fundamental" explanation for them.

In fact, before the current rollercoaster ride began, our Asian-Pacific Financial Forecast wave count showed China's stocks nearing a wave 3 peak, setting the stage for an important decline. On June 5, we wrote:

"The indexes should soon correct in wave 4 for some weeks"

One week later -- on June 12 -- China's stocks turned down in the stomach-churning decline we see today.

Whether this decline marks a long-term top for China's bull market -- the same June 5 Asian-Pacific Financial Forecast shows you what key indicators to look for, and when.

The best part is, EWI has bundled exclusive charts and commentary from that subscriber-only report and made it available as a FREE resource to all Club EWI members.

This free resource, titled "China Stocks: Where Have They Been and Where Are They Going?" may be the most valuable report you read on the developing trend in China's stock market. And the best part is, it's absolutely FREE to all Club EWI members. If you haven't joined already, a life-time membership to Club EWI is also FREE!

Or -- for existing Club EWI members, click here for instant access to the entire "China Stocks: Where Have They Been and Where Are They Going?" report.


This article was syndicated by Elliott Wave International and was originally published under the headline China's Stock Market Rollercoaster Ride Continues. EWI is the world's largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

About the Publisher, Elliott Wave International
Founded in 1979 by Robert R. Prechter Jr., Elliott Wave International (EWI) is the world's largest market forecasting firm. Its staff of full-time analysts provides 24-hour-a-day market analysis to institutional and private investors around the world.


© 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