The Shanghai Composite Index was pretty boring from 2000 to 2006. Look…
And then things got interesting…
China’s stock market went through a bubble boom and bust, along with much of the world. From 2006 to 2008 the Shanghai Composite Index was up over 300%!
Looking backward… the Shanghai adds validity to a premise we’ve discussed before. That is, post-bubble prices (we could say “popped prices”) return to the level at which the bubble first began.
Looking forward… I’m starting to see technical opportunities for the next rally higher. First, the Money Flow Index has been edging higher. This suggests investors’ money is flowing into the market, which is typically bullish for prices.
Second, the Stochastic Oscillator shows the Shanghai Index is currently in oversold territory. This tells me prices are relatively low. If the Stochastic starts trending higher – making higher highs and higher lows – this would add further support to a bullish outlook.
I’d like to see both the Money Flow Index and Stochastic Oscillator moving higher, together. When that occurred in late 2008, the Chinese market rallied 97% in just nine months!
I’ll continue to keep an eye on the Shanghai.
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Harry Dent, one of the most respected economists in the industry, has uncovered a disturbing market event that could soon devastate millions of investors. In short, he has undeniable proof that one of the market’s safest and most popular investments is about to get slaughtered… and it will have dire consequences for those who don’t prepare right away.
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