This is the chart that tracks companies on the Shanghai index. This is the S&P created index and for now, is the best I can track the Shanghai index with. I’m convinced that any fundamental news that comes from China is controlled by China’s highly efficient propaganda machine.
The fundamentals in China are far worse than anything you may have been reading. It’s not rocket science but the Chinese economy is slowing much faster than we think. China is a nation of zombie, companies, banks, and cities. I could go on and on but the short version is that China is all built on debt, and so far has broken all records making the 2008 crisis seem like a walk in the park.
The peak in 2008 matches a major peak in most of the commodities, which I think is wave 3 in Cycle degree. The bear market has been going on for about 10-11 years and I see it far from being finished before any huge bullish phase comes down the pipeline.
Right now the two trend lines put the Shanghai index in no man’s land and that the present rally is just another bear market rally. There is a very convincing inverted zigzag I see and they usually get completely retraced. Mind you that could still take a few years to play out especially since solar cycle #24 is still running.
I don’t have a big Gold/Shanghai ratio database accumulated, but enough to give us some extreme readings. A low ratio means that the Shanghai index is cheap when compared to gold.
Today this ratio sits at 2.37:1, which is down from an extreme of 6.61:1. In 1996 this ratio was 1.29:1 and the Shanghai may even come back to this cheap ratio.
The majority of the world may be fooled by the propaganda of the China miracle rise, but I’m not! Everything regarding China is built on debt as their money printing skills make the USA look like rank amateurs. What brought the 2007-2009 markets down with toxic investments is now being used in China on a scale not even imaginable! I have a very large following from China but the news is censored and false news is rampant. A chart is about the only truth we can see regarding investing in China.
Since the 2007 peak, the Shanghai index tried the second time to break out but failed miserably so far. I see the secondary top as an ending to an inverted zigzag which started back in late 2008. This “A” wave bottom in Intermediate degree would be the point of origin. Returning back to the point of origin would prove this 10-year-old bull/bear market is just a fake like all the other news coming from China.
China Uncensored is an attempt to give us alternate news and I have watched about 20 episodes in the last few weeks. Search out the “Bike Sharing Video” and you will see how markets really work under communist economic logic!
I have no Gold/Shanghai ratio database setup but at present, we are sitting at about 2.10:1 which means it takes about 2.10 gold ounces to buy one unit of the Shanghai stock index.
If we are lucky the Shanghai could also see an “A” wave bottom when the DJIA does the same thing this year or early next year.
If there is one country that can bring down the entire world financial system and that is China. I think big tech companies trying to get a foothold in China have compromised their own security and all their customer’s security as well. Apple is no exception! In a tech bear market, all the horror stories will come out as bearish news becomes a top seller!