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January 16, 2006
End of the China equity market rally, Mon., Jan. 16, 2006, 5:40 AM
On Dec-29-05, the Shanghai Fly and I collaborated to advise you that the Shanghai index would soon be in rally mode. We projected a short-term gain of about +4.5 pct. In just seven trading sessions, the SSE jumped +4.9 pct.
But today the SSE turned south. Long positions in the China equity funds (FXI, PGJ and CHN) ought to be sold.
The Shanghai Fly sends me an early morning note that, as he says, "paints a rather bearish short term picture of the Chinese markets. We're in distribution and at a top now. I think it would be wise to recommend to shareholders of FXI and PGJ and CHN etc etc to sell their positions. Even as a precautionary move.
I have enclosed charts of the Shanghai dailies, intraday, and Shenzhen dailies respectively.
Chart 1
Chart 2
Chart 3
The markets broke high, a false move and crashed. Certainly not expected, but oh well, we do what the chart tells us."
Perceptive guy, the Fly.
And I second his remarks.
Posted by Posted by Bill Cara on January 16, 2006 05:43:03 AM | Category: China