IS THIS THE BEGINNING OF A NEW BEAR MARKET IN CHINA?
2 February 2010 by Cullen Roche
9 Comments
The most basic definition of a bull or bear market is the market’s position when compared to the 200 day moving average. Most chartists consider a market above the 200 day moving average to be in a bull market and a market below the 200 day moving average to be in a bear market. China’s Shanghai Index recently broke below the 200 day and appears to be following classic post bubble price action – a bursting bubble followed by a relief rally based on false hope which is ultimately followed by years of sideways or negative market action (think Japan circa 1995 or Nasdaq circa 2005). Without getting too technical and simply using this very basic definition the Shanghai index has now officially entered bear market territory.
To break below the 200ema is one thing……to remain below is the key signal
for a change in direction…
It is also still rising. Once it turns down, I think it will be safe to declare it in bear territory.
chiq is getting interesting…outperforming fxi
should we look at MA or EMA?
my gut feeling says to not mess the dragon, MAs EMAs not gonna help any wrong trade when another 200m people there step out of the rice fields to enjoy the real world, think about that growth and then there’s another 500m+ people that im sure would love to join and play too. go short PCLN, you have a much beter chance making 30 40%
Without a doubt, The Shanghai Composite Index is poised for a huge correction in the next few months. Not only it’s trading below 200-EMA, its 50-EMA is already rolling over. A rising EMA often acts as support while a declining EMA often acts as resistance. The best way for traders to short China is through FXP (UltraShort Xinhua China 25). The ETF has been on a tear the past few weeks. It has just pulled back. So if traders are bearish on China, you should seriously consider this ETF.
I think that we here in the West need to keep in mind that in China, it’s almost New Years, and many people have gone home to their native cities, towns, etc. to celebrate with family. It’s been exceptionally cold in China this year, and that helped people to decide to leave earlier than usual for home. An associate of ours who lives in Beijing wrote us that she can’t find a plumber right now because they’ve all gone home for the holiday. China’s New Year is like our Thanksgiving, Christmas and New Year’s celebration all in one and lasts for weeks. I’ll believe that the Shanghai Index is in a bear market if it continues falling into April, because by then, the Chinese will have come back to Beijing and begun working again.
Getting ready to jump into FXP… even a decent “correction” could jump a double leveraged short fund by double digits.
A bear market is the situation when the prices of the stocks fall above 20%.In a bear market people are waiting for the bulls to start driving the prices up again. However, a bear is a very tentative bull or a bull that is asleep.