QuantitativeExhaustion

China Bubble with Symmetrical Trending Moves

AMEX:FXI   ISHARES CHINA LARGE-CAP ETF
China Bubble with Symmetrical Trending Moves

It's obvious we are looking at a equity bubble in China. I'm not worried where this goes, I'm more interested in where this ends. I want to be on the put side of this ETF . I have most likely missed 2/3 of this price move. Volatility and price velocity will be much greater on the downside, and more money can be made when the bubble burst.

Symmetrical Lines
In this chart example I'm focused on large impulsive symmetrical moves on the downside. Both moves on the downside had similar angles. I marked these previous downward moves and added them to where Chinese ETF FXI             brokeout.

Timing the Bust

I'm expecting the bubble to top somewhere between July 13 and August 28 (noted vertical line alarms on chart).

Pattern: Bump and Run

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Price Trends

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China Bubble Burst is Collateral Damage Around the World

US Bond Market with positive drift

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US Stocks with positive drift

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Looks like a perfect storm to me, everything happening within expectations.

Dollar rally/ S&P highs ->
Commodities crash (partly due to China slowdown) ->
Europe crash ->
China rally (Money coming from manufacturing/ construction have no place to invest and stock market is the only way) ->

Next few months will be very interesting, as these major trends start changing creating plenty of volatility.... stay in cash and that's opportunity! :D
+3 Reply
Good to know you're also watching these cross collateral money moves. China hot money is leveraged 140:1. Lot of these retail investors investing in China are new to the markets.
+4 Reply
LastBattle QuantitativeExhaustion
Wow! I knew it was highly leveraged, but I was expecting just 5x or so... that's nuts..

anyway :) money are all over, waiting for those who are patient
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+4 Reply
Retail traders (many of who are new to the markets) are averaged leveraged 6:1. It's active hedge funds that are playing US bonds and using those gains to flood money where it can get the best return. Money is now pouring into China, because the algos trend says it's the best opportunity.
+3 Reply
Good chart by the way.. Also shows that China was far behind US and other equity markets, therefore once the breakout took, algo all over the world piled in. Now we have to wait for China to top and later money flows in energy. After money flows into energy, we will see another market panic drop, much like 2008.
+3 Reply
2use LastBattle
Interesting - can you please publish the chart where these are aligned by 2008 sept /dec lows .
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2use 2use
This was to LAST BATTLES Chart comment
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https://www.tradingview.com/e/TYJHVYJt/

^ You may clone my chart :)

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+3 Reply
You thinking about going long FXI ? Positive trend and still no where near where US Stocks-Bonds and Japan Stocks-Bond levels.
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LastBattle QuantitativeExhaustion
I'm waiting for a consolidation to go long, there might be 2 legs up there.
Yeah, clearly the bubble still have room to run.
+2 Reply
Here is another thought. I see Europe is still behind Shanghai Index as well when you compare to 2007 highs, also Financials are behind in sector rotation. What about the possibility of Europe banks such as NBG, DB moving in a bubble fashion?
+3 Reply
2use QuantitativeExhaustion
I am already In china as i kinda expected it to go up. Nikkei breached a resistance from previous 2 tops and now should basically do a move just like USD did when it started running last year. Indeed EU is behind, but i would not just yet bet on NBG. Why i WOULD bet on NBG is because the sheer valuation of 1 per stock is low. It can go lower, if Greece is taken out of EU, shaking the whole EU reputation with it. But if they do try to keep Greece, well, upside is going to happen at some point. Just read that russian is going to pour 18 billion USD in BRICS, and India already had a huge run. Although real estate gives suspicion of being overpriced and a possible crash, China still has potential. I wont touch the gold holdings question here, cause its all a massive speculation (although, some state russia and china stocking up cheap gold). On any picture you take US stocks went too far...but markets tend to amaze at times, although at times i just look at a simple idea getting real. In all of this, China did go up way to fast for my expectations (did not manage to invest more in it) and that is a sign of confidence, maybe over confidence, but still.
+5 Reply
jangseohee QuantitativeExhaustion
picture this: when bulls are about to take a rest, another influx of innocent bulls were let of from a cage, hence the resting bulls are catapulted up ^_^
+3 Reply
Well you riding Shanghai Index bull or not?
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jangseohee QuantitativeExhaustion
not atm
+1 Reply
wangyunshcn QuantitativeExhaustion
I am one of these bulls.
+1 Reply
2use QuantitativeExhaustion
I am, but at the first sign of weakness im out, was almost out today, but it still is going up
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wangyunshcn QuantitativeExhaustion
Glad to know it. But you have neglected three points: a) The currency all these investments or speculations denominated in is inconvertable under the capital account, which means hot money cannot come and go as it pleases; b) Foreign investors cannot easily have access to the Chinese stock market in general, except in forms of various Qualified Foreign Institutional Investors (QFIIs), which have limited market shares; c) The Chinese government, its agencies and its state-owned-enterprises (mainly Treasury Department, People's Bank of China, and Central Huijin Company) all have direct channels in the market, and Revenue has authority to impose new financial taxes if necessary without the parliament's discussion and approbation.
My opinion is the recent crazy rally was due to China's internal reason (monatery easing, manufacturing slowing down, stalling price of real estates, and so on) rather than financial gambling overseas. Though it is crazy and sometime even insane, the government is still willing to see it and everything is in control at present.
+5 Reply
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Is this the fastest/steepest major stock index bump and run you've ever seen?
+3 Reply
QuantitativeExhaustion PRO QuantitativeExhaustion
Late 80's Japan Nikkei bubble was probably as steep on a weekly chart, but not as steep/fast on daily chart like this Shanghai tulip bubble.
+3 Reply
this asset has been consolidating for a good 4 years
perhaps 64 by year end?? *Using most conversative channel
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+3 Reply
Deep OTM calls still worth it.
+3 Reply
the blue zone consolidation looks similar to those in 2006??
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+4 Reply
Still you hesitate. Why are you not a buyer of Shanghai Index?
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jangseohee QuantitativeExhaustion
wait for retracement
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jangseohee QuantitativeExhaustion
LOLz, yeah
+1 Reply
jangseohee QuantitativeExhaustion
that is only a baseless projection, does it really repeat? ^_^
+1 Reply
So are all channel chart proposals baseless projections?
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jangseohee QuantitativeExhaustion
No
+1 Reply
Interesting. I don't know if I can give your channel strategy any credence if there is not any actual investment towards the proposed strategy.
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jangseohee QuantitativeExhaustion
please don, do you own analysis :-)
+1 Reply
jangseohee jangseohee
especially this crazy situation
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This is a great situation. Start of a bubble.
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LastBattle jangseohee
your chart says there's no retracement lol
+4 Reply
wangyunshcn LastBattle
Well, the fact is CN and US do not share any common trading hours, so all these offshore ETFs cannot reflect any intraday fluctuation. They are bought and sold like ordinary unit trusts. If you have a close look at the 'real' charts (charts of their respective underlying indexes), you will find there were retracements, too short and too small within trading days and just about 2-3%, and thus ignored or rather neglected due to the abovementioned nature of offshore ETFs.
+4 Reply
LastBattle wangyunshcn
Those are too minor, usually I won't consider them as a valid retracements if you're looking on the daily chart.
+2 Reply
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About to accelerate
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jangseohee QuantitativeExhaustion
classical vs hidden divergence which one is the bozz?
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jangseohee QuantitativeExhaustion
Holy bulls just started
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with refer in my FXI chart, price is in the middle, it can go either way
in a grey situation which is not my style to take action
+2 Reply
http://www.bloomberg.com/news/articles/2015-04-14/tencent-slumps-most-in-a-year-after-billionaire-ma-cuts-stake

Insiders seems to be pretty comfortable selling at this level now.
+2 Reply
So that means we are half to 1/3 of the way through this bull run. How many times have you seen smart money sell at the top? Smart money/insiders use valuations. How can you valuate when you entire market is in a bubble? Irrational Exuberance.
+3 Reply
FXI had 5 stages up during 2005 - 2007 bull run, and each run gave about 50% back. Right now it seems it had 2 runs already, and 1st run gave 50% back. I suspect the current run (may just ended, may give back 50% as well). Uncertain if more runs are coming but I tend to believe it SHOULD. So pay attention to the current pullback - it MAY NOT be over, but once it does, it MIGHT BE a WONDERFUL buying opportunity (around $45?). Note this is highly speculative in nature.

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+5 Reply
2use CosmicDust
Speculative, but a nice observation!
+3 Reply
how big is the shoulder?
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