March 30, 2008
What It Will Look Like When the Chinese Stock Bubble Bursts (Try Try Again)
Back at the end of January 2007, I wrote this post:
“I’ve lined up the price of the Shanghai Composite to correspond with the peak of the Internet bubble (as represented by the IIX). When bubbles burst it ain’t pretty, and people who are paying the wrong price for Chinese stocks are going to learn an expensive lesson.”
After I wrote that, the Shanghai Composite proceeded to rise straight up, doubling in the following nine months. Oops! But as we all know, the Chinese stock market topped in October, and now the comparison with the old Internet bubble may be on target.
March 30th, 2008 at 10:00 pm
Don’t know if it does the same massive tumble, but I think also it’s in serious trouble.
Next time it consolidates - short!
March 31st, 2008 at 12:43 am
don’t forget indian sensex/nifti…it can plunge another 50% from here..easy come easy go..
March 31st, 2008 at 7:39 am
third times the charm :)
March 31st, 2008 at 8:02 am
why does everyone love log scales so much? all they seem to do is distort chart pattern readability
March 31st, 2008 at 8:19 am
@mh497: The worm has turned for sure.
@gurlate: I was comfortable calling for 15K on the Sensex, but dunno beyond that.
@howard: I think I’ve got it this time, but you’re right, the next post will be called try try try again.
@tim: You’ve got it backwards: it’s the arithmetically-scaled charts that are distorted.
March 31st, 2008 at 8:24 am
maybe its cuz i’m a short seller, we tend to think backwards :)
March 31st, 2008 at 9:41 am
Be careful of a global counter-trend rally that could even go so far as a near-miss retest of most global highs, from October. That could be enough to pull China up some–though clearly China is on its own trajectory.
March 31st, 2008 at 10:16 am
Marjorie: Your guess is as good as mine! I know there are a lot of bargains out there, lots of value plays, but every time I say this someone says How’s That Washington Mutual Value Play, Chairman?!? (The risk of going on the record and being disastrously wrong. Most people avoid this fate by never going on the record about anything, lol.)
April 1st, 2008 at 9:57 am
It is important to know the differences in comparing an individual stock to an index. Same equivalent it is important to know the differences in comparing a sector to a country index. For example the price of an individual stock can go to zero vs an index may approach zero. Sector vs Country is similiar, but different and are very important.
The Elliot Wave formation 12345 is finished. Wave a is almost finish and I will say b could be very powerful, thereafter c to complete the form abc…I would not short…be careful out there.
April 1st, 2008 at 10:13 am
shaun: I know nothing about Elliott Wave and haven’t tried to apply the simple wave structures that I do understand to the Chinese market.