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China's Bear Market???

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August 21, 2009 – Comments (9)

I know, I know...the Shanghai market is up more than 50% year-to-date. How can it be a bear market? Well, as this interesting post from our friends at Pinnacle Advisory Group shows, that market was down more than 20% from 8/4 to 8/19 -- technically indicating a dreaded bear market.

Here's what they write:

We have to monitor the situation in China closely because this is a very big part of the bullish argument [about a global recovery]...So we are left with the question of how to view this latest down move. The bears would argue that the 108% gain from the bottom was a small bull market rally in the overall context of a bear market started October 2007. The bulls would argue the latest sell off was a normal, albeit sharp, pullback during a strong bull run. Additionally, many argue that this could be a foreshadowing of what could occur in the US markets as China led us out of the bear but will lead us right back into it.

Interesting stuff as you think about how you want to position your portfolio to both play some defense, but also not miss a recovery if it is indeed underway.

9 Comments – Post Your Own

#1) On August 21, 2009 at 3:32 PM, automaticaev (31.10) wrote:

china will never surpass america never not going to happen bye.

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#2) On August 21, 2009 at 4:10 PM, biotechmgr (35.96) wrote:

Really good posting. It is wise to pay attention as China may lead the way back down again.

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#3) On August 21, 2009 at 4:14 PM, bcnu6 (29.77) wrote:

automaticaev - never is a very long time bye

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#4) On August 21, 2009 at 4:59 PM, automaticaev (31.10) wrote:

never gonna happen sorry.

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#5) On August 21, 2009 at 5:00 PM, automaticaev (31.10) wrote:

mabe in someones mind it while happen while they sleep.

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#6) On August 21, 2009 at 5:14 PM, automaticaev (31.10) wrote:

never ever ever ever ever ever ever ever ever ever ever ever ever ever ever ever will happen.

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#7) On August 21, 2009 at 5:27 PM, awallejr (83.81) wrote:

I disagree that China led us out of the bear market.  While China's GDP didn't drop to negative, it still dropped alot, propped up mainly because of their infrastructure stimulus plan. Their exporting numbers continue to decline. The US's turn around will have little to do with China's success or failure. 

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#8) On August 21, 2009 at 5:45 PM, mustbepatient (29.46) wrote:

awallejr, $SSEC bottomed in October 2008 while $SPX bottomed in March 2009.  $SSEC even bottomed before the other leading indices.  China's market has led the rally, no question.

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#9) On August 21, 2009 at 8:01 PM, awallejr (83.81) wrote:

China led ITS rally, not ours and I submit it had alot to do with the infrastructure spending on the part of its Gov't.  While I think the markets are ultimately interconnected, the leader has been and still will be the US until China can actually prove it can stand on its own feet and lead.  That's not happening until it moves away from a basically cheap labor manufacturing exporting economy to a growing consumption based economy. And I don't think China can as long as it remains a totalitarian "communist" country.

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