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On 5/25/2011 the Shaghai index broke below a multi-year flag pennant pattern and the Power of the Pattern suggested the impact to the world could be very large! (see post here) The chart above reflects soft performance in a wide variety of assets, very few places to hide after the breakdown last May. Now the Shanghai index is breaking below another support line at (2).
Many are suggesting that Ben-Clause will come to the rescue, by pulling an economic gift from his magical bag. Time will tell if he is that powerful!
For now, sellers have the upper hand in the Shanghai index. The portfolio message a year ago when the Shanghai index broke down….underweight risk assets. Diversification has been challenged to say the least. With continued weakness in the Shanghai index taking place, will the price impact be different this time due to a special gift from "Ben-Clause?" Stay tuned!.
Please see this chart. Make or Break Time.
According to National Corn Growers Association, US corn production has almost doubled since 1991 and yields have increased from 108.6 in 1991 to 152.8 bushels per acre in 2010.
Crop failures due to global warming????
Double Top formation at the break down through the Support at 2252
measured target ~ 2066 or lower
I totally agree with Luke. Yet, the market is still hoping that Benn will act with S&P above 1350…
I have a different read on the technical setup, and I see the development of a fundamental value story in China–to be supplanted by a longer-term growth resurgence led by the consumer.
I see the downside unequivocally <2075 on Shanghai, interesting to read another person's ideas though:
The next long term support line appears to be at about 1800. Another 16-17% loss from here?
Luke….what is in ole Benna-Clause’s big red bag of goodies?
Unfortunately, it looks like it's way too early to start writing wish-letters to Benna-Clause…
He'll bring some "gifts" eventually, but not before the whole survival of the markets depends on it…
I think what's happening now is that the global economy is bifurcating. The simple risk on/risk off trade of the last few years may be ending. Commodities which have seen supply rising and are dependent on Chinese over-investment (copper, base metals) will go into a multi-year decline. Agriculture may rise with increased demand and, perhaps, crop failures due to global warming.
Countries less dependent on foreign exports will tend to do better (read India, US, etc.), likewise, countries who have seen large depreciations (India, Vietnam, Turkey, Poland…, UK & US to a lesser extent.)
What's bad for China (being forced to rebalance and consume more and produce less) will be good for most of the rest of the world. But not Australia, Brazil, Russia, etc.
Anyways, that's how I'm betting.
So let's just wait for the pullback to go back full short again …. "same procedure as every year?"