Shanghai Potential for 30% Rally TA
Shanghai Potential for 30% Rally
By Sheldon McIntyre a GREAT TECHNICAL ANALYST
Sep 28, 2012 10:30 am
In the case of Shanghai Stock Exchange Index, there is a convergence of key technical criteria that suggests that a meaningful rally is near.
The Shanghai Stock Exchange Index (SHA:000001) has been in relentless decline since the middle of 2009 and is now near the 200-month SMA. The monthly chart seen below is showing a positive divergence between price and RS at the most recent lows. As well, the index has declined to its lower channel line
Could a rally be in the offing? Let’s dig a little deeper.
Stacking The Probabilities
1. Positive Divergence: The monthly and weekly charts of the Shanghai Stock Exchange Index show a positive divergence between price and RS.
2. Trend Deviation: The index has declined to the 200-month SMA which indicates an extreme deviation in the bear market trend.
Likewise, the weekly chart is showing the widest deviation from the 200-week SMA since mid-2010.
3. Seasonality: On the margin, the seasonality chart for the Hang Seng points to strong gains into the end of the year.
Of course a 30% rally ( 20-25% left) for whole index will take few monts = we are looking at mid term bull
As traders/investors we seek to stack as many probabilities in our favor prior to the allocation of capital. In the case of Shanghai Stock Exchange Index, there is a convergence of key technical criteria that suggests that a meaningful rally is near. I anticipate a rally of 25-30% in the coming weeks/months
see chart Shanghai Stock Exchange Index (Monthly
https://image.minyanville.com/assets/FCK_Jan2011/images/LisaCatchJuly2012/Shanghai%20Exchange%20Monthly%20Sept%202012.png
Once an index stabilizes at or near the 200-month SMA there is a high probability that it will begin a bear market rally that will top near the declining 200-week SMA. In the case of the Shanghai Stock Exchange Index the weekly chart is showing a positive divergence between price and RS at the most recent lows, and it is currently 31% below the 200-week SMA. The 31% is the widest deviation from the 200-week SMA since mid-2010.
Shanghai Stock Exchange Index (Weekly)
https://image.minyanville.com/assets/FCK_Jan2011/images/LisaCatchJuly2012/Hang%20Seng%20Seasonal.png
Andrew Nyquist is the founder of See It Market. Andrew has been actively investing for over 13 years with a strong focus on technical analysis and swing trading. His blogs, articles, and contributions have appeared on numerous websites, including highly respected Yahoo! Finance, MarketWatch, Business Insider, and Minyanville, where he also contributes to their premium trading platform, the Buzz & Banter. Andrew has also been interviewed and cited across many media outlets, including Dow Jones & Company owned Smartmoney
Example of his work : April 1st he published “Natural Gas Records Monthly Buy Setup.”
At the time Natural Gas was just over 2 dollar
Well it is $ 3.3 now geeeeesus
link https://www.seeitmarket.com/china-potential-for-a-meaningful-rally/
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This TA corresponds with my previous PA post (political analysis )
showing the correlation of rising China after new leadership takes place .
Politics not economics drive China
Here it is again
China’s stock market is inextricably tied to politics.
China’s powerful Communist Party leadership has a cultural tendency
of trying to depress the economy (and hence stocks) in varying ways two years before elections, which occur every five years.
Over the last 20 years China’s GDP growth has been relatively weakest
the two calendar years prior to the National Congress, or election
Chart confirms that .
https://finance.yahoo.com/q/bc?s=000001.SS&t=my&l=on&z=l&q=l&c=
In 2007 = new regime
Shanghai went like 170% in 1-st Y of new guys in power .
2008/09 US generated crisis modified the classic cycle a lot
- but one can still see the correlation.
So , by Nov , 2 engines of world will have new / renewed .leaders
eager to show- off
And by that time the third engine's problem -EU will be resolved one way or another
Coincided with stocks cycle " buy on Halloween - sell in May "
---------------------
Update 1 : EU resolved see " A Complete Guide To Europe's New
€700 Billion Permanent Bailout Fund" Sep. 26, 2012,
https://static.businessinsider.com/image/5062d222ecad041151000005-915/there-are-a-few-differences-between-the-old-efsf-and-the-new-esm.jpg
https://static.businessinsider.com/image/5062d22f69bedd3c04000004-915/payments-into-the-fund-from-member-states-are-frontloaded-in-2012-and-2013.jpg
https://static.businessinsider.com/image/5062d23e69bedddf7f000007-915/heres-how-the-esm-decides-to-give-someone-a-bailout.jpg
https://static.businessinsider.com/image/5062d242ecad044d51000002-915/this-is-how-the-esm-plans-to-bail-out-spanish-banks.jpg
https://static.businessinsider.com/image/5062d24cecad045053000000-915/this-is-the-plan-for-how-the-esm-will-expand-in-size-over-the-next-two-years.jpg
https://static.businessinsider.com/image/5062d242ecad044d51000002-915/this-is-how-the-esm-plans-to-bail-out-spanish-banks.jpg
https://static.businessinsider.com/image/5062d252ecad043551000011-915/this-is-the-bailout-plan-where-the-esm-buys-bonds-issued-directly-from-government-treasuries-on-the-primary-market.jpg
https://static.businessinsider.com/image/5062d254ecad04465100000c-915/this-is-the-bailout-plan-where-the-esm-intervenes-and-buys-government-bonds-in-the-secondary-market-to-influence-interest-rates.jpg
https://static.businessinsider.com/image/5062d25c6bb3f7bb2f000002-915/finally-this-is-the-esms-bailout-plan-for-banks.jpg
Update 2 China almost resolved
-- $ 160 b direct stimulus - need some time to see results
https://www.stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=31503153&l=0&r=0&s=SGQ&t=LIST
https://www.stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=31503230&l=0&r=0&s=SGQ&t=LIST
https://www.stockhouse.com/Bullboards/MessageDetail.aspx?p=0&m=31503234&l=0&r=0&s=SGQ&t=LIST
-- $ 58 b banks re-cap by FREE MONEY = BY US ...... LOOOL
$58 b is almost the interest we and EU pays EVERY Y
for China holding $$ trillions of our debt .
So , we paid for nice chunk of China bailouts loooool and will pay them $ 50 b every year for ever
It takes just 1 political decission to use some of the $$
from their enormous money jar ..... to send Shangai running up
Shanghai 2000 pts is the magic number
Another 1.5% up Mo Oct 10 and 4% up in 2 days geeeeesus
off the 2000 spring board
https://finance.yahoo.com/q/bc?s=000001.SS&t=5d&l=off&z=l&q=l&c=
As is SGQ in HK - Oct 10 = 2.3%
and 5% / 2 days in line with 2 days of Shanghai rally
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BTW: the reconciliation of the 2 different points of wiew
described here
https://www.stockhouse.com/bullboards/messagedetail.aspx?p=0&m=31584919&l=0&r=0&s=sgq&t=LIST
about peak energy / peak of anything
IS PRICE.
At $ 1000 coal or oil they will go to red hell ( read Mongolia LOOOL)
to get them , not just Alaska or miles below ocean floor
.