- The Market Detonation You’re Ignoring: “The Chinese Market Is In An All-On Crash”
by Mac Slavo, June 27th, 2015, SHTFplan.com
With the eyes of the world on Greece and a possible collapse of the of the Eurozone as a likely end result, many are ignoring a potentially much more massive elephant in the room. It’s been the hottest market in the world, so flush with cash that they have actually built entire ghost-cities lacking populations and mega shopping centers without tenants – a clear sign of bubble waiting to be pricked. But the inevitable seems to now be taking hold as once unstoppable Chinese stock markets are now reversing the unprecedented gains seen over the last several years.
Forget Greece. We’ve seen that story before. This could be the first domino:
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”?
– Source: Karl Denninger / The Market Ticker
What happens is exactly what’s happening in Greece and China, and what will undoubtedly soon come to pass in the United States.