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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

China Hang Seng Stocks Index Collapses and Commodities

Stock-Markets / Chinese Stock Market May 24, 2019 - 05:46 PM GMT

By: Chris_Vermeulen

Stock-Markets

The Chinese Hang Seng Index collapsed early this week to new recent lows.  This breakdown in the Chinese major stock index highlights the anticipated fallout from the continued US/China trade war.  Recent data from the Chinese property market and corporate bond markets suggest a broad slowdown in economic activity which may surprise many foreign investors in the weeks/months to come.

Partner this continued economic weakness with the EU Elections and the continued US/China trade issues and we almost have a perfect storm for commodities such as Oil, Copper and other industrial/transportation related shares.  If the trade continues to collapse between the US/China while elections cause the general populations to “pause” in traditional spending habits, it would suggest that we could see a continued breakdown in the general commodity levels over the next 6~12+ months.


First, the Hang Seng Index collapsed much lower this week – prompting the US and UK markets to breakdown as well.  The continued rhetoric between the US and China regarding the Trade War is not helping the global economy much.  Yet, it must continue to some conclusion before the planet can begin to move forward.  At this point, it is almost like watching an old school game of” Chicken” – who flinches first.

Overnight, the German DAX also collapsed.  It is obvious that enormous tensions persist within the EU with the elections hitting now and over the next few days.  The broader concern for skilled traders is “do you believe the EU will be able to pick up the slack of the US Trade War with China??”  If you honestly believe the EU and other foreign nations will be willing to pick up $400B+ USD of trade immediately, we suggest you grab a cup of coffee and watch what happens over the next few weeks with the EU elections, global markets, and economic data.  We don’t believe the EU is capable of taking on another half-trillion USD in trade debt annually right now, or ever, for that matter.

The US Dow Jones Index, even though it has shown some weakness recently, has still held up quite well.  We believe the Capital Shift, where foreign capital has been rushing into the US economy over the past 4+ years, is continuing to provide pricing support for the US stock market and economy.  As long as this continues, we’ll see continued strength in the US stock market and US assets (such as the US Dollar, Real Estate and Debt).

Commodities, on the other hand, appear to be under severe pricing pressure.  We recently authored a series of research posts regarding Oil, Gold and other commodities.  We believe the global commodity index could continue to fall further, as these elections and global trade issues continue to exert pricing pressures of global commodities and trade.  We believe Oil could fall back to levels below $50 ppb and that Gold an Silver are already 20~30% undervalued.  One does not need to be hit on the head to understand the US elections, the trade wars and all the other issues currently executing across the planet may create a perfect storm for certain commodities and global stock market sectors driving prices much lower before they get any better.

If the Commodity Index breaks the current support level, we could see a much broader breakdown in the global stock market, Oil, Copper, Trade, and many other global trade-related issues (retail, housing, corporate debt, and others).  Pay attention because this is going to get very interesting over the next 4~6+ months.

Lots of great price action unfold to take advantage of. Subscribers just closed out a 24% winner and another 3.46% as the markets prepare for a new move. If you want my trade signals and alerts be sure to check out my Wealth Trading Newsletter.

Chris Vermeulen
www.TheTechnicalTraders.com

Chris Vermeulen has been involved in the markets since 1997 and is the founder of Technical Traders Ltd. He is an internationally recognized technical analyst, trader, and is the author of the book: 7 Steps to Win With Logic

Through years of research, trading and helping individual traders around the world. He learned that many traders have great trading ideas, but they lack one thing, they struggle to execute trades in a systematic way for consistent results. Chris helps educate traders with a three-hour video course that can change your trading results for the better.

His mission is to help his clients boost their trading performance while reducing market exposure and portfolio volatility.

He is a regular speaker on HoweStreet.com, and the FinancialSurvivorNetwork radio shows. Chris was also featured on the cover of AmalgaTrader Magazine, and contributes articles to several leading financial hubs like MarketOracle.co.uk

Disclaimer: Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned. Technical Traders Ltd., its owners and the author of this report are not registered broker-dealers or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer. Never make an investment based solely on what you read in an online or printed report, including this report, especially if the investment involves a small, thinly-traded company that isn’t well known. Technical Traders Ltd. and the author of this report has been paid by Cardiff Energy Corp. In addition, the author owns shares of Cardiff Energy Corp. and would also benefit from volume and price appreciation of its stock. The information provided here within should not be construed as a financial analysis but rather as an advertisement. The author’s views and opinions regarding the companies featured in reports are his own views and are based on information that he has researched independently and has received, which the author assumes to be reliable. Technical Traders Ltd. and the author of this report do not guarantee the accuracy, completeness, or usefulness of any content of this report, nor its fitness for any particular purpose. Lastly, the author does not guarantee that any of the companies mentioned in the reports will perform as expected, and any comparisons made to other companies may not be valid or come into effect.

Chris Vermeulen Archive

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