andy74rc:

Very quick analysis of the SSEC Index.

Taking the last long movement on the weekly TF, it did 1975-5178 points. Almost exactly 3200 range.

Doing the calculation of the retrace lines which - look how strange - they go almost perfectly in 400 points each (400.5) it would be:

5178

4778

4378

3978

3578

3178

2778

2378

1978

Now, on the weekly is still long, but on the daily the EMA have crossed short. The end of this wave of correction is not over yet. Note that 3578 is the 50% of the retrace of the original movement and usually is a very important point which acts as a strong support (or a resistance if it's perforated).

ironman510:

I think anybody investing into the Shanghai index expected this. I am hoping it crashes. If it does crash all the way back down to 1000. You have an economic degree so you know exactly what I could do if Shanghai went back to 1000 something. I just think this is an interesting day to share with the guys on this site and it's good to meet a guy like you who knows his stuff. But I don't want to criticize the Shanghai index too much, it bought me a house in China and back in America. It gave me more than any ESL job. I'm pretty much done with the market after getting into an IPO A few months ago stock 603883. We should stay in touch, this is my greatest hobby in China.

Shining_brow:

Ironman - if it's not too rude, would you mind telling me (us) how much you started out with in your investing? I have a little bit I could spare, so am thinking it may be a good time to enter (when everything is low).

icnif77:

@Shining: see my last posts about 'I have little bit to throw in'. Careful with throwing. Look at the last long term Chinese bubble chart.

icnif77:

Yeah, we all had umbrellas opened, before the sudden downpour. Two weeks ago. Don't tell me.

RandomGuy:

Have an upvote, not sure who thumbed you down for saying the truth. Many of those wannabe traders have no clue what they are doing.

Scandinavian:

This is classic China. You know it is too late when everyone says it is a sure deal. Then the market i f'ed. Can't wait until there is talks about how slightly used German luxury cars cannot possibly drop in value, then a few weeks later I will have myself an S-class. 

icnif77:

Saying the truth or 'gloating'? 'I sold my stocks two weeks ago'. Right on time. You are so clever! I envy you. NOT!

Can we see the sell slip, if above statement is so truthful?

English teachers are playing the 'eChina stock-y market'.

Remember something: ''if trader 'gloats', she/he'll always post proof together with the gloat!''

Now, cheerleaders fuk off! Read Andy's technical analysis above.

ironman510:

Yep way too greedy and most of them have no common sense when to stop.. Just like walking across the street with their head aimed down at their cell phone screen than BAM,BOOM well that's it! Game over!

xunliang:

Yeah, I find it funny how suddenly everyone and their wives are suddenly investing in the stock market, expecting to make money when they have no knowledge of what they're doing. 

icnif77:

'0-H':

Following yesterday's furious market drop in Chinese stocks, just before the overnight open, Morgan Stanley came out with a much distributed report urging investors "Not to buy this dip", and so they didn't. As a result, the Shanghai Composite imploded, at one point trading down 8% while the Chinext and Shenzhen markets crashed even more.

 'Morgan is a big dog' 

ironman510:

I meant that sarcastically about China saving their economy. But of course they're going to do something sneaky they always do. Remember that old joke about printing out as much money as they need?

ironman510:

Don't get me started on Visa policies. I had to get a new FEC just because of a new address.

ironman510:

A pull back in Margin lending and also 28 new IPOs coming next week out also gave Shanghai a shave today.. It'll be interesting to see if it affects markets abroad.

icnif77:

US Real time at 10pm China time:

ironman510:

I have no one to make predictions with. Give me your prediction on Greece, Will they default on their loans and will the exit the euro zone? Sorry this is how bored I get China sometimes. 

icnif77:

You'll profit more on currency buying (and hold), if you'll avoid exchange fees, IMO. I don't trade FOREX, but I usually look at 1Y currency chart, and apply 'buy low, ....'.

Other thing I do at currency purchases, I have Gold account at China Merchants Bank, which converts Rmb to any currency by 'spot exchange rate' applied. 

Gold account comes with ATM Visa/Mc card, and you can use it anywhere outside of China. Shopping in foreign currency get deducted from Rmb holdings with spot exchange rate applied.

See 'laowai friendly bank' thread for more info on CMB.

earthizen:

Whatever happens with Greece I don't think the impact would be tsunami scale since it is the same thing dragging on for years already. The panic element is long gone, kind of like people respond to it with a 'so what' attitude. The China shop would spark a couple of thrills, or squeals :) when the bear walks in. 

icnif77:

''Rmb is 'up'' is my 'tin-foil call' since some 4y ago.

1. See 'Rmb Gold standard' post below. New Reserve Currency.

2. Flush-out on Chinex is also one of the shows toward strengthening of Rmb.

3. I rest my case.

earthizen:

Thanks. Indeed I was worried. Pretty true, because of the ambition it is entirely possible that china piled up tons of gold to back rmb. Gold price started to soar right after 911 and that was reasonable. BUT, it didn't return to USD 300 an ounce, its price before 911. Now this is unreasonable, no such degree of drama (911) since 2001. Someone bought huge amount and isn't selling, it seems. That someone can be china, come to think of it.

icnif77:

China with Russia and India.  

And me, an ounce here and there.

earthizen:

Smart guy

So it is China, Russia, India. 3 out of 4 of the BRIC.  Brazil, you do flamingo but not gold?  hahaha.

icnif77:

Brazillian girls all have 'flamingo' buTTs. S. Africa is BRICS too. Loads there.

icnif77:

https://www.everbank.com

Excerpt from Today's Pfennig: ...Speaking of China. I told you last week about a meeting that would take place between leaders of China and the U.S. and that they would have a full agenda to talk about, but have very little to agree on. That meeting is going on now. The IMF decided to throw a spanner in the works of the meeting by saying that, "a promotion of renminbi to Special Drawing Rights (SDR's) may happen in 2015." On a sidebar with China. According to SWIFT, the people that secure and make all the foreign wire transfers in the world, the renminbi became the second most used currency in trade finance, and the fifth most popular payment currency. So, it does appear that China's goal of achieving a wider distribution of their currency is gaining traction, folks.

Chuck Butler

Managing Director

EverBank Global Markets

Editor of A Pfennig For Your Thoughts

1-800-926-4922

earthizen:

Impressive. 

I am watching Africa too. Russia, India, nah. The temperament en masse with these two isn't the "I wanna a Lear for myself, a Lambo for my dog, a Ferrari for my cat, a Bugatti for mistress #159" kind. Brazil sounds like a fun culture, more bohemian, relaxing. I like that. If they make it I don't think they would be like the low lives around here, disgusting and ugly. They would have my applause. 

But my real pick is Africa. Many Africans in PRC, they are learning, they are the pioneers. Sure, a few hit the news headline with 'drugs' but they are 99999 times better than the local psychos with evil written all over their face and venoms drooling out of the corner of their mouth. Even with that Guangzhou riot video, look at their face, eyes, ...I don't see evil, malevolence, unlike the locals here, young/middle/senior (60s). Their didn't go through the cultural revolution which brought out the WORST of human nature (not that I have done both, but I believe killing someone is a piece of cake compare to the skills it take to torture people mentally, physically, emotionally until they commit suicide, i.e. killing themselves, imagine the degree of evil/viciousness/malevolence needed). I would bet on the S. Africa any day over china. They have the population, stamina and will power to do it. Given proper guidance they will surpass this fake china. 

icnif77:

http://www.examiner.com/article/china-announces-they-will-be-setting-new-gold-price-by-end-of-year

The gold markets in the West have been drained for some time, and are now simply derivatives markets that are protected by London's ability to price gold much lower than supply and demand dictates. And since the Comex has not actually delivered any metals for more than two years despite them being a futures delivery market, the potential that China's move to take over physical gold pricing within the next six months could very easily cause a derivatives meltdown, and drive the price of gold even higher than the SGE might set it at.

earthizen:

Thanks, info much appreciated, pertinent info. Yes, they use futures and margins to buy gold right after 911, pushing the price all the way to 400 an ounce, then it crumpled to 330, many got slaughtered I believe, then it went all the way up to 1300 (around there if I remember correctly). Now it is around 1200.

The physical delivery of gold is stable, most gold mines are in Africa, the rest in Australia and Indonesia. Heck, you need time to dig, melt it down, refine it and produce gold bars ! 

Those who are holding tons of gold using futures, Russia, India, China can jerk the price up by demanding delivery. That's the weapon in their arsenal against the USD. 

But I think they miscalculated America's strength. I remember seeing Greenspan live, on TV. He spoke on US debt issue. He was retired by then, rarely spoke about financial markets anymore. All he said was, "America will never go bankrupt (not being able to repay debts). If we need more money we simply print more". No more.

I laughed and laughed and gave the guy both thumbs up. Knowing mainlanders, you can bet that sent the jeolous commies  to the edge of this universe, hahaha. 

Yeah, go ahead, demand delivery. Bankrupt the gold producers, make it their day. So what? Doesn't hurt the American dollar an iota if you think through the subject.

The propaganda commies will fan fear, employ financial goons to do their propaganda articles, that's for sure. All said, at the end of the day you can't eat gold, nor USD 100 notes, haha. 

Sure, Lehman Brothers can't be trusted. But there are 1 billion+ Lehmans in PRC. We all know this.  Our beloved yankees friends who have never lived in PRC, screaming "I see conspiracies everywhere here" should check PRC out.

You have the all-seeing eye on top a pyramid on greenbacks, you see Mao on rmb. 

Between the two, somehow I am more comfortable with the all-seeing eye.... Both you and I along with virtually everyone on this forum know how face wanting, warmongering these foks are, meaining, the economic war is going to be one hell of a kind. We are right in the middle of it.

icnif77:

Sorry, I'm keep blabbering about CMB, but I find it as the best Chinese bank for foreigners.

If you aren't trader, just buy and hold, you'll be good even if you just hold Rmb, and exchange it when opportunity/need for foreign currency arise. IMO.

Shining_brow:

I don't know shit... but I'd buy Aussie dollar. It's at real low levels, and will definitely bounce back to the 1-1.5RMB it lost... sometime soon. (granted, probably sometime after Abbott gets kicked out of office!)

earthizen:

Yes, it is REALLY low, it is about half way between the 10 year peak(2011, one aussies = 7 rmb) and the 2009 (financial tsunami) bottom (one aussies = 4.15 rmb). It kept sliding down for the last month or so (today, one aussie = 4.78 rmb). The real horror is the New Zealand dollar, not only did it slide downward non-stop, it did it in a staircase manner, vertical drop like off the cliff, i.e. virtually no chance to do a stop-loss (i.e. bail out in the middle). It is almost like someone is hunting for preys, have them trapped and is now going for the kill. Not normal with the FX market which goes up and down.

ironman510:

Let's call this a suicide time to get in. My Chinese friends that lost money yesterday are all joking of suicide, divorce or asking to borrow a pair of underwear lol.. A golden time will return but not for a while.. I'm smoking some good stuff, I was here in 2005 when the Shanghai market was only at 985, I didn't join my friends back than in the whole investment gig, but I wish I had, I started in 2013, but if I had started in 2005 I'd be a millionaire.. 

Shining_brow:

Over what time period? Do you trade on the pips? Or on real money?

SaifMalik:

Pips, I do short trades (like really really short trades but with a higher leverage). I've been doing it for a month. Getting the hang of it and my earnings are becoming more and more consistent.

icnif77:

http://www.zerohedge.com/news/2015-06-27/desperate-china-cuts-key-policy-rates-after-stock-market-crash-its-just-1987

If there were still any doubts about what really matters to Beijing when it comes to setting policy rates, they were answered on Saturday when the PBoC cut both the benchmark rate (for the fourth time in eight months) and the RRR rate (for the third time this year) on the heels of the steep declines suffered by Chinese stocks last week. 

Effective tomorrow, the one-year lending rate drops 25bps to 4.85% and some lenders will see RRR fall 50bps. As WSJ notes, this is the first time the PBoC has cute both the benchmark lending rate and the RRR rate on the same day since October of 2008, which should certainly tell you something about how dangerous Beijing thinks the current situation truly is.

icnif77:

http://www.zerohedge.com/news/2015-06-26/single-biggest-driver-stocks-collapsing

ambivalentmace:

buffet pulled out of china 4 years ago with his 10 percent byd sold, american banks have sold their interest, bank of america, ccb, the real players have already gotten out, the only players left are the suckers playing the greater fool theory with their charts of how the fool theory is played, good for a small investor with some balls, but its just vultures picking up the loose change, the big money has already left, rich people have the knowledge and the good sense to leave long before the party is over. china is desperately trying to defend shanghai markets to decimate hong kong trading and make it a history lesson, but false financial statements, out right lies and no trust in the system cant be overcome and when the big boys leave, nobody has any faith anymore, just the fools that have to play by ccp rules and loose alot of money, very sad way to do business, without large institutional investors for a strong underlying base or foundation, your better off playing bingo.

icnif77:

This is traders market. Can't be anything nicer that this for the day traders.

icnif77:

The bounce is dead. CHINEXT - China's tech-heavy high beta 'Nasdaq' - is down 5-6% today, 19% in 3 days, and 33% from highs in early June...!

In 3 weeks, it has given up half its gain of the year...

ironman510:

Tomorrow should tell us a lot.. 

icnif77:

You wrote 'Did you see today's drop on Shanghai....'

'Today' should be readjusted, because drop is never-ending.

ironman510:

Greece crashed world markets wonder if China will join the free fall or pick up us up? They have a funny way to surprise us sometimes.

ironman510:

Hey Man, yeah I'm watching it as we speak, looks like this is clear sign that small investors and big time investors are ready to pull out their money on July first unless China cheats the system somehow..

icnif77:

There's nothing to pull out on small investors. That's classic flush, or P&D in US terms.

andy74rc:

Big investors are the ones going short. The remaining are the sheep to be slaughtered, which have no idea that the market works 2 ways.

Btw, I actually don't know if it's possible for retail investors to do short selling in China.... something I'm wondering.

icnif77:

As 'playing poker with (too) little money'.

andy74rc:

and 30 min later, -0.8%.... call it volatility....

ironman510:

@Andy,Whats your guess of what happends next?

ironman510:

Hahaha your logic is brilliant.. And you're probably right on the money.

icnif77:

http://finance.yahoo.com/news/long-term-chinas-place-want-211418745.html

The downward spiral follows the Shanghai Composite's remarkable run up, which saw the index soar more than 150 percent in 12 months. 

Mauldin pointed out that the Chinese invest differently than Westerners. Where Europeans are generally value players, the Chinese are momentum players. That's why he would not trade Chinese stocks right now. 

"This is one that it's really, you just let it fall and when it turns and you get a reasonable turn and you start seeing that pile back in, then pile back in," he said. "This is a trader's market. It's classic momentum and that's the way the Chinese are going to play it, and you don't want to fight them."

icnif77:

http://www.zerohedge.com/news/2015-06-30/chart-day-china-sending-warning

Submitted by Lance Roberts via STA Wealth Management,

In yesterday's discussion on the technical underpinnings of the market, I pondered the question of whether Greece was really the primary issue of concern for investors.

 

 

"Whether, or not, a Greek exit from the Eurozone or a potential debt default is"the thing" that sparks the next major correction in the markets is unknown. Historically, such a widely "known" event is generally already factored into the markets and has much less of an impact when that event eventually comes to fruition. As Art Cashin suggested this morning:

 

'I think China may be more important than Greece. Stick with the drill – stay wary, alert and very, very nimble.'"

I think that Art may be onto something. While Greece is indeed an issue, and did confirm that they would default on their debt payment to the IMF, this is something that has been long in the making. China, on the other hand, is very a different story.

Today's chart(s) of the day is a look at the history of "bubbles and busts" of the Chinese Shanghai index.

Emerging markets have a long history of speculative investment bubbles and bursts. Whether it has been South American debt or emerging market stocks, they speculative push to garner higher yields or returns has always ended up badly.

As shown in the chart above, the first bubble and burst occurred in 2001. It took almost 4.5 years before that particular investment bubble was unwound.

The second bubble began in early 2006 and after a blistering run popped in mid-2007. Almost 7-years later that bear market ended as the fuse was lit for a new surge to record highs over the last several months.

STOP

Take a very close look at the chart above as there is something eerily familiar about it.

As I stated, throughout history emerging markets have gone through a continuous series of booms and busts driven primarily by speculative greed. Whether it was chasing higher yielding debt instruments or just hopes of more lucrative stock market returns, these chases occurred very late in the market cycle when returns became lean in more mature markets.

The chart below shows why the chart above is so familiar.

The boom/bust cycle of the Chinese Shanghai index has a relationship to the S&P 500 index. The first bubble in China occurred as the "Dot.com" bubble in the U.S. moved into a full speculative frenzy.

After the bursting of that bubble, money primarily stayed domestically oriented until late in the "real estate/credit" bubble. At that late stage, speculation had once again reached the"irrational exuberance" phase as beliefs of ongoing stable economic growth, and the rise of emerging market dominance filled the airwaves. In just a few short months, those dreams were rapidly shattered as economic, and market realities, came to the fore.

Following the "financial crisis," money once again stayed focused primarily in domestic indices as the Federal Reserve flooded the system with liquidity to boost asset prices in hopes of stabilizing a weak economic backdrop. However, as the Federal Reserve ended its last liquidity program, money flooded into China once again chasing liquidity and hopes of higher returns.

The recent plunge in the Chinese market may, or may not be, the sound of the latest bubble popping as I write this missive. However, there are two very important warnings be given here:

 

 

1) The current bubble will eventually end, just as the last two have, in a rather disastrous plunge for those chasing returns.

2) The plunge will also likely be coincident with an unwinding of excesses in the S&P 500.

The current belief is that the economic environment is stable, and growing enough, to support and foster continued expansion in domestic markets for the foreseeable future. Of course, that was also the belief at the peak of the previous two bubbles as well.

I think that Art Cashin could very well be right. Greece may not be "the thing." We need to keep a close eye on China as it may well be the leading indicator for what happens next in the U.S.

*  *  *

But then again there's this from Goldman Sachs this morning:

 

 

Although Chinese equities have taken quite a hit, the manner in which they have fallen seems bullish in nature.

WTF!?

icnif77:

http://vlab.stern.nyu.edu/analysis/VOL.SHCOMP:IND-R.GARCH

SHANGHAI STOCK EXCHANGE COMPOSITE INDEX GARCH VOLATILITY GRAPH

ironman510:

Check out that stock I mentioned: 600795, it's basically electricity..  It is a vet low price and I've bought in 3 times this week and last week and sold it twice and sell again at the next best chance, I never keep this stock longer than 3 to 5 days, no need, check its history pattern and you'll see from February till now the pattern of Y5/Y6/Y7 and it always goes up and down and back up again, why? Because it isn't a product for private business, it's one of China's state gov owned electricity plants. So you can make money on this crashing market still which is great for me because if put in say a Y100,000 after each major collapse at a cheap stock price (Y6.40) like stock 600795 will make me thousands in weeks or a few months, or if Shanghai index apocalypse arrives that's cool too because I never buy in high price stocks, I'm a weekly trader. Check out TCL 00100 an amazing up and down stock you can make quick vacation money with.. A crashing markets has different benefits for small time investors like me..