Shanghai index broke from its multi-year flag/pennant pattern back in May and the worlds stock and commodities markets turned south (see flag breakdown post)
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A break of support in May from the Shanghai Index sent a portfolio message…reduce risk exposure!
Should the Shanghai index confirm a breakdown of the crossroads of support at (2), the message would not be a friendly one for risk assets, especially the weak commodities such as Silver and Copper!
No worries, Chris, appreciate your insights both via the posts and the comments section. A lot of thought-provoking (and money-making) discussion going on here!
Erik….Yes Cattle were one of the last to go in 2008 and so far the meats (hogs and cattle), have yet to give it up. Members are short cattle at the highs with stops above resistance.
GLD became the largest ETF in the states at the same time GLD hit the $1,900 level….reflecting a very crowded trade, at the top of the eiffel tower pattern.
OBV on GLD right now is on support…that gives, GLD owners will pick up the selling pressure.
Great question Erik…hope this helps some.
Chris
Chris, given that CRB is locked in a downtrend, and that cattle was one of the last bastions to break in 2008, wouldn’t you lean on cattle breaking down soon? I know your previous post said you’d go with it if cattle breaks out, but that seems awfully precarious given the CRB/Copper trends in play. Thoughts?
Thanks,
Erik
@ Chris. This time is not different! China is headed for a crash and the market knows it. Those clamoring for a yuan strengthening will be in for a shocker. Same for the Aussie.
Dan…I agree with you. If a train is really going in a direction we want it to, we don’t have to get on at the very first station. I will get back to you per premium info. After my daughters wedding I took a few days break and I shouldn’t have. I have 900+ emails to get through. I have not overlooked anyone, I am just attempting to catch up.
Thanks Dan, hope you and others understand,
Chris
Chris –
Appreciate your thoughts on what constitutes a breakout, that’s about the same rule of thumb that I’ve been using. I’d rather be a little late to the party and have more confidence in the breakdown/breakup.
I passed along my info for the Premium Membership earlier this week via email, if it didn’t make it I can re-send.
Robert…how is it acting since it hit the $1,900 fib resistance/resistance channel?
Weeks before the highs in gold, the Power of the Pattern was suggesting to harvest gold at $1,900, when gold was only at $1,640. (see post here)
Gold declined around $25% from its 2008 high to low, Silver over 70%. Persoanlly I don’t like the size of either decline.
Chris
Ed….it is my fault, per I need to learn not to kid about certain things or make it more clear when I am.
I am serious about my goal, which is “attempting to enlarge portfolios, regardless of market direction” and I attempt to have fun along the way. I just need to be careful not to kid at the wrong time.
I doubt you are the only one in question…Thanks for asking,
Chris
Chris,
Great work !
would you also say gold would also go down-yes it is a commodity put its also considered a form of money and a safe haven ?
Barcelona….great question! Beauty is in the eye of the beholder and a support break is personal choice. If a market is 10% below a support line, I suspect most will say a breakdown has taken place. At 1% to 2%, some will say a breakdown is in question…which I agree with.
This is a weekly chart of the Shanghai, which this week is not over with at this time. I want to see a weekly close below support by at least by 2%+ to say a breakdown has happened.
Chris,
Thanks. I thought that might have been it! Just need to learn how to better interpret your wit… Your Power of the Pattern approach has helped me protect my portfolio. Thanks.
Ed
Ed…Poor humor on my part, sorry. The Shanghai index in my opinion ED is VERY IMPORTANT, that is why I have attempted to keep updating posts on it for months and months. When the breakdown in the Flag took place, this was sign for investors to pull back risk expsoure.
If this crossroads of support gives way, the signal from the breakdown would be the world is most likely going to slow down even more.
Thanks for your comment and viewership and sorry for any confusion on my part,
Chris
Chris, in regards to the breakdown of Shanghai, what, in your assessment, qualifies as a breakdown? %? Points? Very curious to know.
Gracias!
Chris, I am new to your site – love it! Great analysis WITH humor!! Have learned quite a bit in the last few weeks of following you. I am a little confused by the post this morning. You say not to look at the Shanghai, that it’s not important for future stocks/commodities, but later in the post you state a loss of support at “2” would not be good for risk assets (or silver/copper). These statements seem contradictory. Would you please clarify for us “newbies”??
Wasn’t it bouncing so nicely off support last week?
Maybe it’s going to do one little bounce for every different support line, I hear they have REAL democracy in China, so that would fit.
I also hear they have real problems… Thankfully we have clear patterns to guide us!