Yves on China Stocks Turning Point

Yves sent this chart over to show how the Shanghai SEE is now the first major exchange to rollover after the Bubble Echo rally after last year's crash. China began their stimulus much sooner (and much more effectively) than the US, and the China market took off last November while US stocks rumbled and stumbled until March.

The wave pattern is textbook as I noted yesterday; the pattern suggests a fairly strong drop.

The second chart from the Asian STU concurs:

We are at the point in the wave count where the selling should intensify in the very short-term. ... We think market participants could be surprised by a fast move down to the 2620-2640 area that represents both the late August low and the lower Keltner channel on the daily chart.

After a 3% drop Friday and a flat day Monday, the SSEE was down over 2.3% Tuesday and falling fairly fast past another 2.3% down nearing the close on Wed.

Yves also passes on that Oct 1 is the 60th anniversary of communist rule in China. They may get the wrong sort of fireworks!

Yves adds that he had called the original bounce and top and the possibility of this pattern down. He writes that the first time China turned (July) he thought it bore watching but was a fringe element which would not drag down the Dow right away. This time he expects it to drag down the Dow and beyond.  He will be on Bloomberg Radio Wednesday (Sep23) at 4p ET.

Comments

[Mamma Boom Boom]

I certainly agree. My feeling is that China is in much worse condition than is reported.

[Eventhorizon]

I agree with you Ned, I find it staggering how many people claim that everything the US govt puts out is fraudulant yet swallow Chinese Govt economic data without question.

[min]

Yup... realize all the ramififcations of this?

[min]

Mind you ... the U.S. Government is quite careless in the accuracy of their stats, no doubt.

China; however, is just as downright underhanded and covert as ever. The Communistic closed society mentality will not/cannot change overnight; it may slowly fade away as those who were indoctrinated this way slowly die off amd that will take a long time still...

The U.S. Government is no saint but that is more or less already known. China is where surprises will be coming from very soon...

[Mathieu]

"Yves adds that he had called the original bounce and top and the possibility of this pattern down",...

... but he forgot to say that he's been totally wrong about the US market...

[Cary Lloyd]

Many of you have had the opportunity to read about the coming volatility crash. Some of you are suspicious, even incredulous. That is to be expected! The average absolute value price move of the Dow this year is over thirty points and it seems weird to consider that most days will be bounded by just a handful of points, but consider this...

Volatility runs in cycles. It is due for a crash.

If we get into a situation where the Dow APPEARS bounded on the downside at 1000 then people will start to buy as it approaches 1000. Likewise, they will sell if their merely APPEARS to be a ceiling at 1200. Thus, eventually, we will see the S and P converge around a value of 1100.

I am not pulling these values out of thin air. Some of my work is based on guesstimation and hunch, to be sure, but the majority is based on a careful, unbiased look at the hard facts as they come to me in dreams that I scrupulously record when I wake up. My unconscious has been a powerful tool and I am only making it available to the world now because --as I have noted in previous posts-- a most unusual state of affairs has arisen:

I am not over 90% certain of the facts! This doesn't happen every day; in fact, it has only happened to me once in the past twenty years of work and study and careful, scientific dream analysis etc.

Again-- I am not speculating. My 90% figure is real. Volatility will dry up as surely as the Dead Sea.

[Cary Lloyd]

I also read Prechter and Neely, so I am not some ignorant hallucinating boob. I know all about the impulse waves, corrections, fibonacci ratios, etc.

The Wave Elliott Theory is real, hard truth, to be sure. It will be operating perfectly, beautifully, ineffably, as it always does.

But it will be bounded between spx 1000 and 1200.

[Upstart]

U.S. just pulling back before heading higher, according to Carl Futia - to about 1035 emini. This would fit with a 5-month cycle bottom for September that I mentioned. A larger pullback than the one that ended around Sept. 1st...then higher into October.

[min]

Cary; Is Elvis alive?

[Dreaming]

.....and will we have a White Christmas?