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August 1, 2006

Shanghai Fly is active in China, Tues., August 1, 2006, 8:44 AM

The Fly sent me a note last night from Shanghai to say things are abuzz in his great city.

"Bill, After a few long weeks of anticipation and waiting, August 1st has finally arrived (in Shanghai anyways). Last few days have been quite bloody, with sustained losses (4 down days in a row). Let's see how margin trading affects the market today. I'm heavily long myself even though the last two days have been rather unpleasant for the bulls."

Yes, August 1 is the date that the Chinese authorities finally allowed margin trading of stocks listed on the Shanghai Exchange. I too wonder how bullish that might be for the market there. Didn't help today because prices were down -0.75 pct.

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Posted by Posted by Bill Cara on August 1, 2006 08:44:25 AM | Category: China

Discourse

OT to mtzion: given your theory that the DJTA provides the "tell", you may find this of particular interest:

(quoted from Raymond James Investments Jeff Saut
and his call for the week)

The call for this week: Last week the S&P 500 pushed above both its 50-day moving average (DMA) at 1257, as well as its 200-DMA (1266). However, the S&P 400 Mid Cap Index did not. Meanwhile, the 10-year T'Note yield dipped below 5%, vaulting the D-J Utility Index to within sneezing distance of its all-time high. Yet, almost unnoticed has been the silent “crash� in the D-J Transportation Average (DJTA), which despite Friday's Fling (+109 points), is off more than 11% from its July 3rd high. This is not insignificant because if the markets are a discounting mechanism, the economically sensitive DJTA is telegraphing serious economic slowing ahead, confirming what is occurring in the real estate complex.

Posted by: number2son [TypeKey Profile Page] at August 1, 2006 9:08 AM [link]

number2son,

and when you factor in that a lot of momentum money went into stuff like rail stocks, the selling is exacerbated. maybe there's a lot of hot money feeling kind of trapped.

note to jeff saut: "IF the markets are a discounting mechanism..?" - c'mon jeff, the tape is as close to truth as i'll ever get between 9:30 am and 4:00 pm.

Posted by: mtzion [TypeKey Profile Page] at August 1, 2006 10:16 AM [link]