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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Special China Stock Market Update - Another Shanghai Index Correction Due?

Stock-Markets / Chinese Stock Market Apr 11, 2007 - 11:20 AM GMT

By: Marty_Chenard

Stock-Markets

Most of you know that I spend at least 15 hours a week on new research or exploring new market patterns. I found something very unusual going on in the Shanghai Index, unusual enough that I thought it was important to share it with you ...

Will the Shanghai 180 Index correct within 4 days and take our markets down with it?

This morning, we made a very interesting observation about the Shanghai 180 Index. The Shanghai is an index that we are watching pretty closely due to its correlation with our Feb. 27th. market drop.

I will show you two Shanghai 180 charts this morning with a very interesting pattern.


The first chart shows the Shanghai from last year to this year. As you know, as an index or market continues to have a bull rise, the angle of ascent increases. If you look at the first three rectangles, you can see how the price action moves up at higher angles as the rally moves forward.

Each rectangle is the same size and shape depicting the same time periods. I drew a line from the lower corner to the upper corner of each rectangle and this gives you equal slopes for each area.

Now ... see the next chart for the fascinating pattern .

This chart is a close up of the last two rectangles.

Now, for the fascinating pattern ...

I drew a triangle that encompassed the move of the first 9 days that held the trend line on the first rectangle.

I then duplicated the triangle's size 3 more times and overlaid them on the remaining parts of both rectangles.

In the first rectangle , the upper triangle ends above the rectangle's box and marks the exact peak and reversal of the Shanghai 180. Pretty amazing symmetry.

So in rectangle 1, this is what occurred:

a. The index moved up for 9 days holding its trend line.
b. The index moved on the right side of the trend line and remained below the second triangle for 2 days .
c. It then completed the second 9 day move on the underside of the trend line and reached the upper corner of the rectangle .
d. It then moved up another 4 more days in order to reach the top of the same sized triangle .
e. After reaching that point the Shanghai corrected.

Now let's look at the second rectangle:

a. The index moved up for 9 days holding its trend line.
b. The index moved on the right side of the trend line and remained below the second triangle for 2 days .
c. It then completed the second 9 day move on the underside of the trend line and reached the upper corner of the rectangle .

That's were we are now ... 3 exact pattern repeats so far.

The interesting question is ... Will (d) and (e) also repeat this exact pattern?

If it does, then the Shanghai will make its high in 4 days and then correct again.

The Shanghai January 31st. correction didn't really affect our markets, but the Shanghai February 27th. correction did. If this pattern repeats, then by the middle of next week, the Shanghai will correct with a good possibility that it takes our markets with it.

Comments: We don't really know if (d) and (e) will follow the same pattern, and if the Shanghai would then correct and affect our markets. We do know that this is a very fascinating pattern that is repeating itself 100% so far. I know that this is some very unusual pattern research, but when my eye can pick out such a pattern with such unusual repeat factors, then I feel it is my duty to at least share the observations with you.

 

By Marty Chenard
http://www.stocktiming.com/

Please Note: We do not issue Buy or Sell timing recommendations on these Free daily update pages . I hope you understand, that in fairness, our Buy/Sell recommendations and advanced market Models are only available to our paid subscribers on a password required basis. Membership information

Marty Chenard is the Author and Teacher of two Seminar Courses on "Advanced Technical Analysis Investing", Mr. Chenard has been investing for over 30 years. In 2001 when the NASDAQ dropped 24.5%, his personal investment performance for the year was a gain of 57.428%. He is an Advanced Stock Market Technical Analyst that has developed his own proprietary analytical tools.  As a result, he was out of the market two weeks before the 1987 Crash in the most recent Bear Market he faxed his Members in March 2000 telling them all to SELL.  He is an advanced technical analyst and not an investment advisor, nor a securities broker.


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