The Market Ticker
Commentary on The Capital Markets- Category [Market Musings]

The Chinese market is in an all-on crash.

Last night the Shanghai index was down 8%, and while there have been some wild recovery rallies during the last couple of weeks as well the cumulative loss is close to 20% at this point, the formal "declaration" of a bear market.

That market had been in a parabolic blow-off since roughly December, a classic (to a chartist) three-stage parabolic move with two retracements.  The most-recent move down, however, threatens to violate the uptrend support originated back in November and has already erased the gains since May.

Yes, a 2-month round-trip of about 20%.

"Liquidity" is usually given as the reason for the "reasonableness" of stock valuations these days.  I have only one question: What happens when said "liquidity" is really nothing more than a loan (which it always is) and the borrowed funds are lost instead or producing "gains"?

smiley

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